The High Streets that missed out on millions
The Chancellor’s giving £1.6 bn to help shops hit by soaring business rates. But shockingly, councils failed to make full use of his last helping hand
STRUGGLING High Street shops have missed out on millions of pounds of vital emergency funding following a series of shambolic blunders.
On Monday, Chancellor Philip Hammond announced a £1.6 billion lifeline for Britain’s High Streets, which included a £900 million relief package to help shops battling sky-high business rates. It means that around 500,000 shops, pubs, restaurants and cafes are expected to see their rates bills cut by up to a third over the next two years.
The Treasury will also set aside £675 million to help councils rejuvenate their town centres.
But it is the Government’s second attempt at helping the High Street, after a £ 435 million business rates relief package was announced in 2017. This was supposed to help businesses struggling to pay their business rates.
However, Money Mail can today reveal that millions of pounds from the first fund failed to reach the businesses it was intended to help, and was instead returned to Treasury coffers.
As many as three-quarters of councils failed to hand out their allocated cash to ailing local firms. In some cases, councils spent only an eighth of their budgets, while others helped as few as five shops.
One local authority failed to spend almost £800,000 of its extra funding.
Eighteen months ago, more than 500,000 shops, pubs and restaurants were hit by business rates hikes — a tax on bricks and mortar businesses.
Following a Money Mail campaign, ministers pledged to introduce a £300 million fund for councils to distribute to those worst affected over four years, as part of a wider £435 million business rates relief package.
Some £175 million of this had to be spent in the first 12 months — by the end of September — or be returned to the Government. But many councils misunderstood the rules, while others failed to promote the scheme or made it too complicated for small businesses to apply.
Some councils claim the Government did not give them enough time to distribute the money before it was lost.
EMBARRASSINGLy, the council in former Communities Secretary Sajid Javid’s own constituency, Bromsgrove, Worcestershire, handed out only a third of the cash it had been given to help its High Street.
Mr Javid, now Home Secretary, was previously in charge of ensuring the fund was distributed by councils and had promised ‘absolutely no delay’ in doing so. yet figures collated by Retail Express and chartered surveyors Bankier Sloan reveal just £46,300 of the council’s £134,500 pot was given out in time — helping only 37 businesses.
Nearby Redditch Borough Council helped only 21 shops and spent just £15,800 out of £124,000, an eighth of its budget. Stevenage Borough Council, Hertfordshire, gave cash to just five businesses in the town and awarded £18,800 out of a possible £100,000.
While Swindon Borough Council, Wiltshire, spent only £58,000 out of £314,300, helping 41 businesses — with more than a quarter of a million pounds leftover.
Fenland District Council, in Cambridgeshire, spent £21,277 out of almost £160,000, barely a seventh of its budget. And Broxbourne Borough Council, in Hertfordshire, spent a fifth of its pot, distributing £38,000 out of £213,500 and helping only 31 shops.
Camden Council, North London, allocated 100 pc of its fund, but said shop closures meant that, in the end, it was only able to hand out 86 pc of it.
It meant that, despite distributing £4.84 million to businesses, it had £790,000 leftover.
By contrast, around 30 councils spent all of their funding. Barnsley Council, for example, spent every penny of its £276,000 and helped an incredible 2,135 businesses.
Jerry Schurder, head of business rates at consultancy Gerald Eve, branded the distribution of the grant ‘shambolic’. He says: ‘It was a poorly designed fund by the Government and a knee- jerk response to the backlash against the rates revaluation.
‘It was then badly implemented by some councils which did not pay sufficient attention to the criteria.’
The fund was supposed to help the smallest businesses facing the greatest rises.
The Government decided how much money to allocate to each council by calculating the total increase in bills for firms facing a minimum 12.5 pc rate rise and with a rateable value of less than £200,000 — the rental value on which business rates are based.
But many councils used this same rigid criteria when deciding which firms should receive cash — awarding it only to those hit by rate rises of more than 12.5pc.
In fact, councils had total freedom to spend the cash however they wished, as long as it went towards reducing business r a t e s b i l l s . Some councils excluded businesses they felt did not need the cash as desperately, such as schools, banks and estate agents.
Meanwhile, multinational firms and Government bodies were typically excluded because they had exceeded state aid limits via other grants. The Ministry of Housing, Communities and Local Government refused to say how much cash had not been spent.
But research by Retail Express suggests it was as much as £17.5 million — 10 pc of the budget.
A series of Freedom of Information requests showed that 159 out of the 195 councils that replied had failed to spend all of their grant by the end of April.
The deadline to hand out the cash was actually September 30, but many councils stopped distributing the 2017/18 grant at the end of the financial year.
News editor of Retail Express, Jack Courtez, who led the research, says: ‘I think it is incredible that councils claim they are being squeezed by a lack of central Government funding, but when they do receive money they fail to distribute it.
‘Many councils have let down local businesses which depended on this funding.’
Chartered surveyor Ian Sloan, of Bankier Sloan, who contacted councils to warn them they faced a massive under- spend, says: ‘ The distribution of this fund has been a mess. Local businesses have lost out on money they really needed and now the money is gone.’
Councillor Matt Dormer, leader of Redditch Borough Council, says that as the funding is drawn from general taxation, the council has ‘a duty to spend it in an appropriate manner, and not to simply seek to spend as much of it as possible.’
Bromsgrove Council says it had to bear in mind that ‘ any relief given to people facing an increase in their rates gives them a competitive advantage.’
Broxbourne Borough Council said that ‘100 pc of businesses who completed and returned application forms were granted the relief.’ Swindon Council says it had to award cash automatically when few firms applied. Stevenage Borough Council said it has already granted £ 32,392 of the £36,000 it has been allocated for the coming year. And Fenland Council says it would give higher amounts to successful firms this year as a result of the low take-up of the relief in 2017/18. Camden’s Councillor Richard Olszewski says the council awarded all of its funds but ‘due to businesses moving in and out of the borough and a substantial number of successful rating appeals’ it was then unable to distribute it all before the deadline. This year it has over-allocated funds to allow for business turnover.
A total of £ 175 million was supposed to have been handed out in 2017/18, followed by £85 million this year, then £35 million in 2019/20 and £5 million in 2020/2021.
A Government spokesman says: ‘To help local businesses thrive, we have introduced over £10 billion worth of business rates support so nearly a third of all business pay no rates at all.’