Many already struggling small businesses in Hackney are uniting to oppose new changes proposed by the government to business rates that threaten their very existence.
The growth of Hackney’s small businesses in the last decade and a half has given the borough a distinctiveness and individuality as well as providing some much needed employment. Between 2004 -2012, the growth rate for businesses in Hackney was 40%, a rate 17% higher than London as a whole. Hackney’s economy is made up of a large number of small enterprises employing 1-4 people. But now the sustainability of this vibrant but quite fragile sector seems threatened by the twin threat of the government’s proposed new business rate and sharp rises in business rents.
In April the new business rate will come into effect, and according to the Hackney Citizen; the impact on Hackney’s traders will be greater than in the rest of London. This is due to the highly questionable basis on which business rates are assessed. The government has revalued premises based on property prices and while these have soared in the borough this has had no positive bearing on this sector.
Hackney’s average increase in ‘rateable value’ is 46 per cent. As a result, many small and medium-sized businesses face runaway bills, with some expecting to pay an extra £100,000 per year.
Hackney Council estimates that 262 local businesses will see their bills increase by between £10,000 and £25,000 and another 145 traders face a hike of between £25,000 and £50,000, and 34 are set for a colossal increase of over £100,000.
As steering group member of Sustainable Hackney I attended a packed crisis summit, organised jointly by the council and the East End Trades Guild (EETG) that was attended and supported by Meg Hillier, Labour MP for Hackney South and Shoreditch and Hackney’s mayor Philip Glanville. They left little doubt that this ill-conceived Tory plan poses a major existential threat to Hackney’s economy; Meg Hillier considered this to be, “… the biggest onslaught on small businesses that I have seen in my lifetime.” And Glanville said, “The sheer severity of the impact on this part of London is unjustifiable if you have any care for the social, cultural or economic fabric of its communities. It is not right that thousands of businesses could be priced out just because the bricks and mortar around them has doubled in price.”
Among the many businesses represented at the EETG summit was JC Motors of Haggerston. Len Maloney has run the business for over twenty years and he now employs four young local mechanics. Once he had established the business he worked with an organisation called Hackney Inspire that offered work placements to Hackney school students. During this time he has taken about 25 placements as well as working with Skyway, a project that gave young ex-offenders short work placement blocks.
He saw how important it was to give young, local people a break and to give them encouragement and support. Akim, who came with his colleagues, is such an example. He started helping out when he was only 13 and now he is working full-time and also studying at the community college. Summing up, Len Maloney said; “we have tried to give our customers and our staff an honest break. I think we deserve the same treatment.” But Len is also facing another consequence of the perverse logic of soaring property values in south Hackney. Two years ago Len collected a thousand signatures from customers and supporters to oppose a threat every bit as dire as the rate rise. TfL (Transport for London) who owns his railway arch premises wanted to raise his annual rent from £22,000 to an unaffordable sum of £72,000 - £84,000. This threat is likely to revisit him this year as it is with other businesses in London Fields where Network Rail’s is demanding devastating rent rises for similar arches railway of 200 per cent rent.
Whether the government will listen to these concerns is unclear. But as the mayor told summit attendees; the under-secretary of state for communities and local government, Marcus Jones, response to a letter from the council warning the changes could obliterate many local businesses, did not bode well. He suggested unhelpfully that for businesses not eligible for relief, councils should pick up the extra costs. Perhaps understanding this suggestion would not go down well, Marcus Jones did not take up his invitation to the summit. It is clear that the pressure needs to be piled on to get this supposedly pro-business government to listen and act.
A petition from Hackney calling on the government to rethink its plans is to be delivered to Downing Street next week.
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