Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill

Witness Evidence submitted by Philip Clarkson BSc FRICS IRRV (Hons), Director – Rating, Lambert Smith Hampton (RDDB04)

EXECUTIVE SUMMARY

1. The significant economic effect of Covid19 on the parking sector

2. The representations made to Government by the parking sector for financial support due to the economic effect of Covid19

3. The attempt to obtain relief through the Material Change of Circumstances appeal established route which has now been overruled

4. The need for fair allocation of the £1.5 billion relief pot to sectors which have been hit hardest economically but have yet to receive any relief

INTRODUCTION

I am a Director of Lambert Smith Hampton, a property consultancy business. I specialise in providing business rates advice to the commercial property sector and have over 30 years’ experience in this role.

Over the last 15 months I have been involved in specifically advising clients in the car parking industry who have been severely affected by the pandemic and so far, unlike the retail, hospitality and leisure sectors which they serve, have received no assistance in the form of rating relief similar to those sectors.

I have followed the process of the Bill and listened to the debate on the second reading in the House of Commons on Monday 28th June 2021.

EVIDENCE

1. The parking community set up a Covid 19 response group in March 2020 and the British Parking Association commenced dialogue with Government departments, particularly the Department of Health and Social Care. One immediate response in respect of some car parks was to keep them open to ensure access to healthcare and food supplies free of charge and also provide free parking to NHS frontline staff during the crisis.

2. Many car parks were asked to stay open and complied with requests thereby supporting the frontline of the NHS, however, income from normal sources dropped significantly following the imposition of the Government restrictions on 23rd March 2020.

3. National parking operators took a significant hit on income during the lockdowns and it will be a good while before parking businesses recover. These operators have suffered most economically of all sectors of the economy that have yet to receive any business rate relief following the implementation of Covid-19 restrictions.

4. In April 2020 MHCLG initially set up a regular fortnightly Parking Focus Group session, with a range of stakeholders from across government, (MHCLG, DFT, DVLA, Department of Health And Social Care and NHS England), Local Government (The Local Government Association and London Councils) plus the BPA and IPC. In essence these Focus Groups provided a regular forum to share views and discuss issues involving parking, so that everyone had a common understanding of the position. Representations were made to MHCLG for appropriate business rate relief in line with that given to the retail, hospitality and leisure sectors of the economy. David King, from MHCLG clarified the government's position, it being that HM Treasury and the Government’s view was that business rate relief would not generally apply to the parking sector. This was contrary to the initial indications given that parking associated with retail, hospitality and leisure should be able to access business rate relief. Instead the advice given from MHCLG was to seek recompense for the loss in income by submitting MCC appeals against RVs which would be effective from 24th March 2020 when the Government restrictions became effective. Such action was taken and appeals were submitted to the Valuation Office Agency. These appeals have now become null and void following the Government announcement on 25th March 2021.

5. I was involved in discussions with the VOA nationally regarding appropriate reductions following the Covid19 MCC appeals submitted on car parks and by January 2021 we had reached a provisional agreement on the Rateable Value reductions to apply for the physical effect of Coronavirus on the value of a number of car parks. Had this provisional agreement been formalised my car parking clients would by now have received the appropriate rate refunds for 2020/21 based on these agreed RV reductions. Instead this agreement became null and void following the Government announcement on 25th March 2021 that restrictions on the use of property and the effects of that in the locality of those properties would not be able to be taken account of in any MCC appeal citing the physical effect of Covid19 in the locality.

6. The Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill which follows from the 25th March 2021 announcement would at first glance seem to provide relief for the car parking sector through the implementation of the provision of the additional £1.5 billion for ratepayers impacted by the pandemic who have not been able to access business rate reliefs. It is unclear, however, how the £1.5 billion figure was calculated and I have real concerns over whether it will be enough to support all those businesses that desperately need it. I am particularly concerned that the figure may not be enough to compensate the car parking sector that, as previously mentioned, has been particularly hard hit (see Appendix 1-NCP facing administration as restructuring vote looms-14th June 2021).

7. It is crucial for the car parking sector to receive an amount of relief which compensates it for the losses suffered from March 2020 to the present. I have heard that relief will be prioritised to those companies that are finding it now difficult to survive but that principle has not applied in the granting of the 100% rate relief to retail, hospitality and leisure-many companies have benefited from it who are trading well now.

8. The schemes which Billing Authorities produce will depend on Government guidance. If that guidance is simple it is likely to be unfair but if it is fair it is likely to be complex and time consuming to prove losses. Time will be of the essence as, if the relief is governed by Section 47 of the Local Government Finance Act, a date bar will apply such that any application for relief if made after 30th September 2021 will not be able to be backdated to rate year 20/21 ie the year when the worst losses were experienced! I presume some alteration to statute will therefore be made to overcome this problem?

9. I appreciate that the % of RV reductions that were "agreed" with the VOA for the Covid19 MCC appeals will not necessarily be matched by the quantum of relief received but I trust that MCHLG will have regard to the discussions they had with the British Parking Association at the outset of the pandemic and also be aware of the "agreed" allowance made with the VOA. If so this will indicate the significant impact the effects of Covid19 and Government restrictions have had on the parking sector.

10. There will now be many claims made on this pot of £1.5billion, some by sectors that have not suffered to the same degree as the parking sector and I trust the guidance produced by MCHLG to BAs will make it clear how to differentiate between those sectors truly deserving relief and those not.

July 2021

APPENDIX 1

Company News HQ

NCP facing administration as restructuring vote looms

Mon, 14 Jun 2021 | ADMINISTRATION

NCP, the UK’s largest car park provider, has revealed that it is at risk of falling into administration ahead of a vote on the company’s newly announced restructuring plan.

The restructuring plan would lead to a significant shakeup of the company’s business model, resulting in many landlords facing large rent cuts. As such, some of the 500 landlords working with the company have reportedly entered into discussions with other operators in a bid to avoid a drop in rental income.

NCP has reportedly been facing financial struggles as a result of stay-at-home orders during the coronavirus pandemic. It has subsequently seen its revenues drop by 80 per cent and has turned to a possible restructuring in an attempt to save the company.

Commenting on the restructuring plan, NCP stated that a rent cut would be a "last resort" and it would instead be pursuing plans to pull out of contracts for unprofitable parking facilities. However, the firm stated that it would be forced to call in administrators if it is unable to secure support from car park landlords.

Park 24, NCP’s Japanese owner, has stated that it backs the plans but will cut funding if it doesn’t succeed. However, this will tip the carpark firm into insolvency.

However, an NCP spokesperson has said that the company’s focus remains on securing the "best possible outcome" for the business, as well as for its creditors and stakeholders.

They added: "We would urge all landlords to vote in favour of the plan, which we firmly believe will result in a higher return for each class of creditor, than in the reasonable alternative, insolvency."

 

Prepared 9th July 2021