How empties like Cornhill Walk in Bury St Edmunds can impact West Suffolk Council's operation
It was once a centrepiece of Bury St Edmunds’s town centre, but Cornhill Walk Shopping Centre now bears the red banner of doom – also known as a mark on Google reading ‘permanently closed’. While redevelopment plans continue to be rumoured, the sad-looking site is now one of several empty units.
Shop vacancies in Bury are fewer and further between than in other towns – around 7.9 per cent of units are empty compared to the national average of 10 per cent – but Mark Cordell, chief executive of Our Bury St Edmunds, the local business improvement district, says the rate of vacancies is higher than he has previously known.
“A town does not look as desirable when there are empty units, it can impact on that visual aspect when someone visiting sees the empty Cornhill Walk or Palmers,” he said.
But Cornhill Walk is not just an example of an undesirable empty shop front. It is also an empty ‘non-domestic property’. This means it is eligible for business rates – a tax calculated by central government based on a property’s rateable value using local rent averages. It is calculated by the specific kind of property rather than the land itself and can be controversial.
“Business rates are an outdated system that disproportionately punish town centres,” said Mr Cordell, who added that he felt the tax was a key reason why more than 2,000 shops were closing every year on UK high streets.
“We would now never come up with a system like this one.
“It brings in around £30 billion a year for central government, they now get more from this than Council Tax. But the system is unfair.”
David Marjoram, owner of the Gusto Pronto group, agrees that rates need to be reformed as they are ‘offputting’ to start-ups.
Alex Till, chief executive at non-for-profit business support group Menta, said: “It is not unreasonable that rates should be paid, but what businesses want is a level playing field. Our high streets are almost forcing out businesses because of the competitor pressures they face from online businesses, that are not burdened by rates. We should be looking at policies which proactively stimulate the high street and city centres.”
Business rates are paid by the occupier of the property and when they become empty the liability shifts to the landlord. They are collected by local authorities and passed on to central government – which then gives some of it back.
West Suffolk Council’s business rate retention is worth about £7.5 million, around 14 per cent of its annual budget. It is not ring-fenced for spending in specific areas and can be used to pay for any of its services.
It is a significant sum for the council, especially considering the revenue support grant, received from central government, once a bedrock of council funding, will reduce to nothing from April 2021.
West Suffolk Council is also set to lose income from the government’s new home bonus, which will cease from April 2024, and it makes for quite an uncertain time. It’s in the council’s interests to keep shops open and paying business rates – both for the potential of the town and their finances.
Cllr Sarah Broughton, portfolio holder for resources, said: “Our success is intrinsically linked to the health of our business communities.
“With the Post Office redevelopment we will be reshaping a central part of the centre to make it more enticing. We are a major supporter of the business improvement district and we also invest in The Apex and Abbey Gardens.”
She added that financial challenges in the face of cuts had seen the authority look to behave more commercially in other areas, such as its investment in Suffolk Business Park and Haverhill Research Park.
“We are also working in partnership with education and businesses to meet skills gaps and we have directly invested in factory and office premises to secure rental income and enable business growth for major local employers. All of this has meant that West Suffolk businesses are competitive and that they have been able to grow, which in turn has provided us with income.”
But the authority does face challenges in its business rate retention. The current system means that once empty, non-domestic properties, a term which extends to offices and restaurants, are exempt from business rates for up to six months depending on the type of property. This has seen the Government, Suffolk County Council and West Suffolk Council collectively miss out on £75,000 in business rates from west Suffolk town centres in the past year.
The council is also wary of loopholes landlords are looking to use to exploit the system to avoid paying rates – which also has an impact on the council’s finances. Cllr Broughton added: “The Government is looking at how it addresses this in terms of local authority funding and we would like to see some certainty over that. We are calling on the Government not just to close some of the loopholes around business rates but also to level the playing field so that online retail businesses aren’t able to undercut high street businesses. And we ask that they could give local authorities greater freedoms to better support our local business community.”
Mr Cordell agreed it was time for the government ‘to actually do something’ to address business rates after ‘a decade of promises’. And both parties are now waiting anxiously to find out what will be the result of the Government’s pledge to reform business rates this year – which goes hand-in-hand with its ‘fairer funding review’.
However, vibrant town centres remain an integral part of our community.
Jo Churchill, MP for Bury, said: “I regularly meet with businesses across the constituency and I know how important the issue of business rates is to them. Our high streets in Bury, Stowmarket and Needham Market are facing a change in consumer behaviour and conditions are tough. However, vibrant town centres remain an integral part of our community.
“In 2020-21 the Government will increase the existing business rates retail discount to 50 per cent up to a rateable value of £51,000. This will be welcome news for independent shops, pubs, restaurants and cafés.
“The planned review and re-valuation will enable a broad and long-term approach to be taken and I look forward to contributing to it. A particular focus of mine will be on business rates retention and pushing for local money to be spent on local priorities.”
More by this authorWilliam Mata