Small co-ops fear increased business rates could drive them to the wall

Co-ops are among small business who fear they could be wiped out by the business rate increase which takes effect in April, adding thousands of pounds to their annual costs.

The revaluation of the England and Wales business rate is the first since 2010 and has been affected by a sharp rise in property prices over those years.

The rate is calculated by multiplying the rateable value of a property (RV) by the Uniform Business Rate (a standard multiplier set by the government).

The increase means many businesses will lose eligibility for Business Rates relief, which starts at 50% for businesses with an RV up to £6,000 and slides down to 0% at £12,000.

Although firms in the midlands and the north are largely unaffected, London and the south east will be hard hit. One of those affected is Craftco, a small worker co-op in Southwold, Suffolk. It faces a rise in annual rates from £152 to £7,000 over three years.

“The way this is happening will destroy small businesses,” says founder-member and director Julie Carpenter. “It will destroy the high street as we know it. It’s destruction of diversity and a real suppression of initiative.”

Craftco, which formed in 1987, supports local craftspeople and and runs a gallery and shop on Southwold High Street. Because it only takes 36% commission on sales, Ms Carpenter says it would have to do an extra £80,000 in trade to cover the new rates.

Fellow Craftco director Irina Sibrijns has set up a petition, backed by the local council, for the issue to be discussed in parliament.

“The council is horrified,” says Ms Carpenter. “National chains are pushing up property values, and independents are paying for this in their rates. Rising property values are a cost to small retailers, not a source of profit.

“The petition is a way of spreading word and getting support. If it is debated in parliament, there’s a chance that some things could change.”

Firms in London’s Lambeth borough will see an average rise of 35% in rates – and in some cases businesses face an immediate 45% hike. Its council is also working with local businesses to challenge the government.

“Alongside increasing staffing costs, rents and uncertainty over Brexit, the rise in rates could prove crippling to many businesses,” said a statement from the council.

“Although local authorities like Lambeth must collect business rates, the majority go to central government, and the way it is redistributed means Lambeth will not see a penny of the extra money, meaning no local benefit.”

Lambeth wants measures to help businesses cope, such as a phasing plan or transitional relief, and a longer term review of the effectiveness of business rates.

Businesses say the unexpectedly large increase, with just six months’ notice, will slow investment, job creation and profitability when confidence and stability are needed.

“The changes will affect each of our members in different ways,” said a spokeswoman for the Co-operative Councils’ Innovation Network (CCIN), which represents co-operative local authorities.

“Those with more, and larger, businesses – particularly those in London boroughs – are being affected disproportionately harder than those with fewer, or smaller, businesses.

“We are really worried about the impact on small businesses. And with other potential increases in costs effecting UK business, like exchange rates, energy and fuel costs, any increase in business rates could be damaging for small co-operatives and other SMEs.”