Memorandum by British BIDs (SBR 8)
1. BRITISH BIDS
1.1 British BIDs is the nationwide membership
organisation for both formal and developing BIDs, and stakeholders
with an interest in BIDs, across Britain. It is run by Partnership
Solutions in collaboration with the British Urban Regeneration
Association. The organisation works closely with formal and developing
BIDs and carries out regular research and benchmarking surveys
of all formal operating BIDs around the country (currently 45
BIDs exist) and as such represents those in the policy and dissemination
work undertaken.
2. THE BID LANDSCAPE
IN THE
UK
2.1 Since 2005, when the first BID ballot
was held and won, the number of BIDs in England has been steadily
rising. In 2006, we saw the first successful ballot in Wales.
Since then the Scottish Executive has passed BID legislation,
which came into force in April 2007 and has commenced a pilot
programme. Interest in the concept is also building in Northern
Ireland.
2.2 So far 58 BID ballots have taken place
in Britain, of which 46 have been successful. We now have 45 formal
BIDs in Britain, with one having already been through a renewal
ballot.
2.3 These can be broken down into "types"
of BID as follows: Town Centre BIDs—28; Leisure BIDs—2;
Commercial BIDs—1; Industrial BIDs—11; Mixed use BIDs—2;
and Citywide—1.
3. THE POTENTIAL
IMPACT OF
THE SBR ON
BIDS
3.1 The legislative framework from BIDs
grew out of the original Green Paper that proposed the idea of
a Supplementary Business Rate. At that time, the idea of BIDs
was favoured over the SBR approach due to it's clear localism
and accountability to the business community.
3.2 It is evident from the sharp growth
of BIDs across the country that this concept of "business-led
local management" is being supported by the business communities.
From the first renewal ballot success—held in Heart of London
in February 2007—it is further demonstrated that businesses
are seeing direct benefits and have thus supported the continuation
of that BID.
3.3 The proposals relating to SBR have given
cause for concern within the BID fraternity. The key concerns,
against the main issues raised in the call for evidence, are as
follows:
3.3.1 Accountability and Approval Mechanisms:
(a) BIDs have proved to be accountable and
transparent due to the nature of operating at a very local level
and therefore businesses may be keen to protect the concept of
BIDs above a supplementary rate. The average number of businesses
within a BID boundary is between 300 and 600 and as such is a
very manageable number to ensure real engagement of businesses
is taking place in the locality.
(b) If the supplementary rate can be applied
through consultation only rather than through a voting mechanism,
it may prove easier to implement a supplementary rate in an area
rather than a BID levy that requires an independent ballot process.
This would potentially prove damaging to existing BIDs at their
renewal ballot point and indeed prevent the further development
of BIDs in new areas.
(c) With the local authority being required
to undertake an impact assessment, this should ensure that consideration
of existing or planned BID levies are taken into account but there
are clearly no guarantees and safeguards in place for businesses
if the SBR does not require a voting mechanism.
(d) With only upper tier authorities being
able to apply the supplementary rate, this means that the coverage
of such a rate would be considerably wider than any BID mechanism
although in some cases the two charges may be able to operate
alongside each other within a wider strategic framework.
(e) But for London, it may be difficult for
33 boroughs, the GLA and the business community to reach an acceptable
arrangement to apply a single supplementary rate across the capital.
At the current time there are 16 BIDs in London, with more in
the pipeline.
(f) With no universal time limit imposed,
it may prove difficult to plan and predict when a supplementary
rate may be applied and how this might affect an existing BID
levy on a fixed term, especially when a renewal ballot is required
in the case of BIDs at least every five years.
3.3.2. Appropriate Scale of the Supplement:
(a) The basic principle of implementing a
supplementary rate and a BID levy in the same area may prove too
much (in cost terms) for the local businesses to bear.
(b) In the vast majority of cases, the levy
rate for BIDs is 1% of rateable value and this is being considered
to be the "norm" by many businesses. Some have exceeded
the 1% rate but only one BID in a "town centre" location
has gone above 2%. Some industrial estates are looking at higher
rates, but the maximum currently is 4%, and these higher rates
reflect the considerably lower rateable values found in industrial
areas.
(c) In a number of cases, a cap has been
introduced to reduce the amount that disproportionately large
businesses within an area are asked to pay. Without these caps,
it is unlikely that these large businesses would be prepared to
support the BID proposals at ballot.
3.3.3 Threshold for payments:
(a) The vast majority of BIDs have introduced
a minimum threshold, below which businesses do not vote or pay
for the levy. This threshold varies in each individual BID depending
on the rateable values and the number and size of businesses in
the area. The lowest thresholds tend to be £5,000 rateable
value (that basically cuts out any business who would be paying
less than £50 per annum in levy charge) and the highest threshold
to date has been £250,000 rateable value (in New West End
Company BID in the West End of London).
(b) There are also numerous examples of where
special conditions are taken in account and reflected in the levy
rules, for examples giving discounts to charities and discounting
certain uses of property (upper floors, offices etc).
4. SUMMARY
4.1 It is very clear from the experience
of BIDs so far that the model is working because it has the ability
to be developed and implemented in each locality in a very flexible
way that is responding to full and thorough consultation with
local businesses.
4.2 The BID companies are then continuing
to have regular and comprehensive communication and engagement
with the businesses that are paying the levy to ensure that they
genuinely deliver value year on year to the business community.
4.3 Sophisticated levy rules are being used
in the vast majority of cases to reflect the specific needs and
circumstances within each locality.
4.4 If SBR is to be successful it will need
to take on board the early lessons from the BID concept and recognise
that local delivery to local areas is working and therefore should
not be jeopardised.
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