The Budget 2020: relevance to BIDs and the places they serve

The Budget contained a series of announcements that will potentially have an impact on the areas many BIDs work in, though this impact may yet be overshadowed as responses to coronavirus are updated.

 

Business rates

Shops, cinemas, restaurants, pubs, and music venues with a rateable value of less than £51,000 will not pay Business Rates in the year from April 6th 2020. This will also include art galleries, museums, gyms, nightclubs, theatres and guest houses. Many were previously eligible for a discount under a scheme announced in the 2018 Budget, but this will be welcome news in many places. Last night Salisbury BID announced this would benefit over 250 of the BID’s 500 levy payers.

There is an additional allowance for pubs with a rateable value of up to £100,000 of a £5,000 discount. Businesses that already eligible for Small Business Rate Relief or Rural Rate Relief will be eligible from 6th April for a £3,000 cash grant paid through local authorities. The guidance says this will apply to 700,000 businesses.

This business rate holiday does not benefit larger retailers or businesses but yesterday alongside the Budget the government also released a Green Paper that sets out the Terms of Reference for a fundamental review of business rates. The review has three objectives: to reduce the overall burden on businesses, improve the current business rate system, consider more fundamental changes in the medium to long term. The first objective would reduce income for government and local authorities.

The Green Paper says it will focus on 4 main areas:

  1. improvements that could be made from April 2021 alongside the planned revaluation;
  2. reforms to put the tax on a more sustainable basis, looking at the basis of the valuations, how this is done and how often, the use of reliefs, the impact on investment and growth etc;
  3. the administration of business rates covering valuation and appeals etc;
  4. exploring alternatives to business rates, particularly within the taxation of land and property.

One important caveat is that “the review will not consider the overall level of funding for local government”. This has got commentators asking how fundamental the review will be and how it will differ from the 2015 review.

Whilst until this announcement we had no idea of the timetable, the Paper says it will be concluded at the Autumn Budget. This seems to mean that previous submissions and evidence will have to be taken into account. See https://www.gov.uk/government/publications/business-rates-review-terms-of-reference/hm-treasury-fundamental-review-of-business-rates-terms-of-reference if you want to know more.

 

Scotland, Wales and Northern Ireland – business rates and extra funding

It’s important to note that while extra funding (increases to block grants) was announced for Scotland (£640m more), Wales (£360m more) and Northern Ireland (£210m more) executives as a result of this budget, the rates relief mentioned is at present only confirmed across England. The decision on whether to follow suit in the devolved nations and how best to use the additional funding to support efforts to combat coronavirus is to be made by the respective finance ministers in the coming days and weeks.

Also of significance is an announcement of four new City and Growth Deals, accounting for £242 million of investment. This total figure will cover Deals in Scotland, Wales and Northern Ireland: £25 million for Argyll and Bute; £55 million for Mid Wales; £126 million for Mid, South and West of Northern Ireland; and £36 million for Causeway Coast and Glens.

Further support for business

The budget also announced broader financial support for businesses coping with the economic impact of coronavirus, specifically to cash flows. This package includes:

A Coronavirus Business Interruption Loan Scheme:
This temporary loan scheme will support businesses to access bank lending and overdrafts. The British Business Bank will guarantee 80% of the value of loans offered by banks to businesses, up to a £1.2 million cap per individual loan. There will also a cap for each lender on the total value of loans they can offer. Although there is, as yet, no further detail on the level of this lender cap or routes of application for businesses, the government has said that the scheme will support up to £1 billion of additional lending.

Time to Pay helpline:
The government has announced that businesses and those who are self-employed can access support and advice on their tax obligations and payments via a new dedicated COVID-19 telephone helpline.

Using this helpline, businesses may be able to agree a ‘Time to Pay’ arrangement with HMRC. This mechanism was also used in response to flooding and the financial crisis, giving businesses a time-limited deferral period on HMRC liabilities owed and a pre-agreed time period to pay these back.

The budget also states that HMRC will waive late payment penalties and interest where a business experiences administrative difficulties contacting HMRC or paying taxes due to COVID-19.

 

Rough sleeping

There will be £643 million to address rough sleeping including funding for new accommodation, substance misuse recovery and support services.

 

Infrastructure investment

The Budget included significant announcements on infrastructure funding, with £27 billion for road building over the next 5 years to deliver better access on key routes and to ports and airports. £1 billion was announced for the Transforming Cities Fund to support bus and cycling infrastructure in 12 English cities and there was significant funding for developing transport infrastructure in West Yorkshire.

There is an uplift in investment in flood defences which will be welcome by many of those BIDs that have had to cope this winter and £5 billion for gigabit broadband in rural areas as well as investment in mobile coverage in those area. Alongside this is £9.5 billion for affordable homes development.

 

Capital funding appraisal

The budget makes reference to HM Treasury’s Green Book review, and whilst there is no specific information as to how the Green Book rules will change it say the review “will enhance the strategic development and assessment of projects, consider how to assess and present local impacts and look to develop new analytical methods for transformative or place-based interventions.”

Changing the Green Book rules in this way could see the type of projects and interventions funded that can start to tackle entrenched social, economic and environmental challenges – and which may bring about the type of place improvements that many BIDs operating in these locations would support.

 

Economic Data

The budget commits £5m to improving methods for monitoring the economy, to support the development of new economic data and its more innovative use. As BIDs know, there is not easy availability of economic and other indicators at a small area level so this announcement is promising. We will want to ensure the innovative use of data includes the type of monitoring, evaluation and impact studies that TBF BIDs want to do.