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Rochdale Slashes Business Rates To Stop Town Centre Decline

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Telegraph 14/12/14

'Officials in Rochdale are turning to “radical” measures to help its struggling town centre by slashing shop owners’ business rates bill by 80pc.

New businesses moving into empty shops will get an 80pc discount on their business rates for the first year, and a 50pc cut in the second year.

The proposal, backed by leader of Rochdale Council Richard Farnell, is expected to be approved when it goes before the council’s cabinet on Monday.

Business rates, a tax on commercial property, are set by central government, but local councils have flexibility over how they are paid. Rochdale Council has set aside £100,000 to pay the rates bill owed to the Government, effectively subsidising shop owners.

The scheme will cover 23 empty units across Rochdale’s main shopping areas. It aims to tackle vacancy rates of 22.7pc, compared to a UK average of 13.5pc.

“Like a lot of industrial northern towns, our town centre has been hit hard over the past 20 years. We’ve got to do something. It’s not good enough for policy-makers and councils to sit there and watch the gradual decline of the town centre. It will cost us a lot – we’ve got major budget problems already – but we have dug deep into our pockets to fund this,” said Mr Farnell.

The Labour MP for Rochdale, Simon Danczuk, backing the move, said rates bills were “hopelessly” out of touch with property values.

He pointed to the case of local businessman Ian Shaw, who used to run fish and chip shop The Best Cod in Town, but who was forced to close last year because of “sky-high” business rates.

Mr Shaw’s annual rent was £6,000, but his business rates bill was £19,000.

“It’s deterring investment and holding back the town,” said Mr Danczuk.

Criticism over Britain’s 400-year-old business rates system has risen in recent years.

Experts have blamed the “outdated” system in part for the decline of high street shopping in towns and cities as traders struggle to compete against online retailers.

The UK currently has the highest business rates of any European Union country.

In the Autumn Statement, Chancellor George Osborne said there will be a review into the structure of business rates, which will be completed by early 2016.

Mr Osborne also announced that business rates relief, designed to help shop owners with properties that have a rateable value of less than £50,000, would be doubled to £1,500 next year.

But MP Mr Danczuk said the changes don’t go far enough.

“A few small discounts offered by the Chancellor, which are more or less swallowed up by the 2pc increase due next year, is small beer and won’t address the problem. Councils like Rochdale are being forced to dip into already depleted funds to fund discounts because it’s the only way to kickstart high street investment.”'

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Guest eight

The scheme will cover 23 empty units across Rochdale’s main shopping areas. It aims to tackle vacancy rates of 22.7pc, compared to a UK average of 13.5pc.

This figure itself seems like fantasy to me.

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It will cost us a lot – we’ve got major budget problems already – but we have dug deep into our pockets to fund this,” said Mr Farnell.

It'll not cost them anything because they'll be getting funds in when they weren't before. It's the past policies that have cost them a lot and for sure they'll have to change.

As for "we have dug deep into our pockets to fund this" what that seems to mean is that they've been digging deep into everyone elses pockets but it's a fair bet that there's been little or no digging into their own pockets.

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So it's 80% discount in year 1 (great), 50% discount in year 2 (also good) and then back to normal in year 3?

New businesses therefore go bust in year 3.

On reading the first post this was my reaction. The reduction needs to be permanent as in Year 3 the shop may no longer be viable and close, which surely defeats the object of this plan?

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Will only benefit landlords.

Will only benefit landlords.

Yes - landlords pay the empty rates while they are empty.

Maybe the landlords should cut the rent instead to attract tenants - this scheme basically means other ratepayers and council taxpayers have to pay for this to offset the lost income. So its another nice subsidy - for the rentiers!

And lets not get into all the avoidance schemes around empty rates - expect rapid turnovers in these shops with ever changing occupiers and void periods so they can get this discount indefinitely. Easily done - it happens now!

Edited by MARTINX9

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It'll not cost them anything because they'll be getting funds in when they weren't before. It's the past policies that have cost them a lot and for sure they'll have to change.

As for "we have dug deep into our pockets to fund this" what that seems to mean is that they've been digging deep into everyone elses pockets but it's a fair bet that there's been little or no digging into their own pockets.

double think.

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It'll not cost them anything because they'll be getting funds in when they weren't before. It's the past policies that have cost them a lot and for sure they'll have to change.

As for "we have dug deep into our pockets to fund this" what that seems to mean is that they've been digging deep into everyone elses pockets but it's a fair bet that there's been little or no digging into their own pockets.

It sounds like they are obliged to pay central government the difference.

Rochdale Council has set aside £100,000 to pay the rates bill owed to the Government, effectively subsidising shop owners.

So they are using local taxpayers' money to subsidise the national taxpayer by paying them the money they wouldn't otherwise have if they left the shops empty.

Generally mental. I wonder how much it'll cost to administer this.

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It sounds like they are obliged to pay central government the difference.

So they are using local taxpayers' money to subsidise the national taxpayer by paying them the money they wouldn't otherwise have if they left the shops empty.

Generally mental. I wonder how much it'll cost to administer this.

Maybe they should tell the Government the truth.

That they are NOT a success, that business is NOT booming and to frack right off with the algorythms used to calculate the rates due to be passed up.

The whole system is a house of cards based on what ifs and hopium.

There is no rates gathering on these units.

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Maybe they should tell the Government the truth.

That they are NOT a success, that business is NOT booming and to frack right off with the algorythms used to calculate the rates due to be passed up.

The whole system is a house of cards based on what ifs and hopium.

There is no rates gathering on these units.

This case illustrates the argument for regional devolution. The specific needs of deprived town centres is not being addressed by a top-down business rates system that applies the same formula to Knightsbridge as to Rochdale town centre.

The blocker here is central government, it sounds like the local council are attempting to find solutions.

Edited to add:

This dovetails into housing. Imagine if local councils were allowed to keep the proceeds of the sell-off of council housing via right to buy. They may have been able to use it to build new social housing and we wouldn't have had such a huge BTL bonanza on ex-local authority flats.

Edited by Bear Goggles

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If they were serious - which of course they are not - why not reduce everyone's taxes, and reduce spending particularly on managers and executives?

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They probably aren't doing anyone any favours encouraging people to open crappy little independent shops whose heyday passed in the last century.

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