Alongside increasing staffing costs, rents and uncertainty over Brexit, the rise in rates could prove crippling to many businesses.
Lambeth has written to the Secretary of State for Communities and Local Government asking for measures to be put in place to allow businesses to cope with any rates rise, such as a phasing plan or more appropriate transitional relief, and to carry out a longer term review of the effectiveness of business rates as a method of tax.
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.
What Lambeth businesses have to say
Businesses are arguing that the risk of such an unexpectedly large tax increase will result in a slowing of investment, job creation and profitability for business at a time when confidence and stability are needed more than ever.
Dominic Lake, Founder of Canteen restaurant, on the South Bank, said: “How serious is it? Very serious. Does it keep me up at night? Yes it does, because I’m responsible for 150 people just in my small business. If my cost base rises – and there is a threshold I can charge for any of the items on our menu – there’s a crunch. It’s a very serious commercial impact, not just for my business but any business in hospitality.”
Scott Leonard, Founder & Creative Director at The Champion Agency in Brixton, said: “SMEs face the most uncertainty they’ve ever faced – we’re in a very uncertain period within the country – to then levy them with a tax of up to 30% higher than what they’re currently paying is not acceptable.”
Javier Moreno, owner of Café Barcelona in Streatham, said: “Small business owners who are actually the ones who create the community, who build up the neighbourhood, who make the economy grow, are going to struggle a lot after this increase.”
John Bigos, Managing Director at London Duck Tours, based on the South Bank, said: “Lambeth are doing a great job in trying to stimulate business and encourage people to come into the borough. How do I square off the new drive to bring employment to Lambeth with just over 30% increase in our rates bill without any justification?”
Word from the Cabinet
Cllr Jack Hopkins, Lambeth Cabinet Member for Regeneration, Business and Culture, said: “This huge rise in rates is incredibly unfair on businesses in London, and Lambeth in particular.
“We are a borough that looks to harness and encourage small businesses to grow, provide jobs and strengthen the local economy.
“We have a great track record in that, Lambeth has had the biggest rate of new business growth of any London Borough, yet this huge increase in costs, on top of the uncertain economic climate, increasing rents and staffing costs, puts all that progress at risk.
“Businesses of all sizes are rightfully worried about these rising costs and we are standing up to government alongside them to try and protect their livelihoods and those of the staff they employ.”
What the council is doing
The council is campaigning alongside the Lambeth’s Business Improvement Districts against the rates rise and has written to every business in the borough alerting them to the impending increase, and suggesting how they can make representations to government.
A London-wide campaign is also underway, supported by Lambeth council and backed by the capital’s Mayor Sadiq Khan along with London Councils, London First, London Chamber of Commerce, Federation of Small Businesses London and New West End Company, with 37 additional groups including 32 London BIDS.
London businesses overall will pay an additional £855 million in business rates every year, while businesses in much of the rest of the country will see rates decrease in real terms.