Chamber response to consultation on rating of commercial properties: small businesses, large retail

1. The Londonderry Chamber welcomes the opportunity to comment and respond to the Department of Finance and Personnel consultation document seeking views on proposed changes to the business rate system.

2. The Londonderry Chamber understands that the purpose of the changes are to seek a method of rating that would rebalance the business rates system and ultimately support smaller business. The Londonderry Chamber seeks to respond to the preferred approach by the Finance Minister, as outlined in the consultation document, which offers an expansion of the small business rate relief scheme (SBRR), which would be funded through applying a levy to the largest/highest value retail properties.

3. The Londonderry Chamber is the largest business representation organization in the North West region of Northern Ireland. We represent 500 companies in the region and play a leading role in the furtherance of the economic and social life in the North West. As the ultimate business network and the voice of local business, we are committed to the enhancement of economic prosperity and quality of life throughout the city and surrounding environs.

4. The Londonderry Chamber has not undertaken any independent research into the rating system in Northern Ireland but we have researched other rating supports delivered by other devolved administrations as well as national business bodies. The Londonderry Chamber has consulted with its members and we have engaged with other Business Alliances throughout NI prior to forming our response.

5. Whilst the Londonderry Chamber welcomes action by the Minister to address and reduce the rising operational costs facing small local businesses and applauds his efforts to double the coverage of small business rates relief, the Chamber disagrees with the Ministers preferred option as outlined in the consultation document.

6. Whilst the measures proposed in the consultation are well intentioned the chamber takes the view that imposing 20% extra costs on retail premises with a rateable value of £500,00 or more in the form of a regional rate supplement is using a very blunt rating mechanism.

7. Although framed as a levy on "out of town retailers" the Chamber takes the view that the levy will affect and impose increased costs on many high street retailers. In fact, published figures clearly demonstrate that 60 % of the premises that will be affected by the levy are near to or located in town and city centres.

8. Larger retail operators located in High Street locations within Northern Ireland, (predominately Belfast based at present) are unable to pass these costs on to their customers and the Chamber fears that these increased costs might impact negatively on retail jobs and cause familiar high street stores to seek alternative more business friendly locations from which to trade.

9. We believe that the suggested rating system will ultimately make attracting large retail investors into Derry City Centre more difficult and could have an adverse effect on the City's position as the North West's premier shopping destination. We believe that it will curb our ambitions to grow our retail offering.

10. Larger retail premises which are currently operating within the High Street are also facing extremely challenging trading conditions and operating on slim margins. We have seen a number of visible high street brands going into administration in recent months. We believe that the supplementary rate as suggested is unfair, discriminatory and has the potential to threaten their future viability.

11. Northern Ireland is already a more expensive place to do business than other UK regions because of its peripheral location and given that it is separated from the mainland UK and key centres of population and distribution. The Chamber takes the view that the proposed levy will make Northern Ireland a less attractive and more expensive place to do business and as a consequence, planned or proposed investments initially destined for Northern Ireland may be postponed or shelved or more worryingly located to other UK regions with lower cost bases that offer larger retailers more favourable trading conditions and a statutory regime which positively attracts and encourages new investment and actively stimulates new job creation.

12. The proposed levy does not send out a clear signal that Northern Ireland is open for business. In fact, such additional costs may deter new stores from setting up here altogether thereby representing a missed opportunity to create much needed new jobs and opportunities to create and enhance the development of a balanced and diverse city centre retail offering.

13. The proposed rates relief for the smaller business is however welcome and we would ask government to consider alternative funding mechanisms for what is clearly a short term measure. Based on recent findings the Londonderry Chamber would ask DFP to consider an extra rating levy on large retailers (NAV £500,000) that sell alcohol might be a more targeted "Out of Town Levy".

14. The Chamber takes the view that business improvement districts involving collaborative partnerships between a range of city stakeholders is another effective and appropriate way of tackling some of the long term challenges facing businesses and retailers within this city and would help address pressing issues like reduced footfall levels and reduced sales.

15. The chamber would recommend that additional more targeted supports are developed to help small retailers - like lack of access to finance, countering the threats that rising online sales pose to the retail sector and positive initiatives which address declining retail sales and rising product and transportation costs.

16. The Chamber would like to take the opportunity to remind the Minister/Executive that similar proposals were recently rejected by the Scottish Parliament once closer consideration had been given to the adverse consequences which were likely to arise if a similar levy was introduced.

17. The chamber strongly agrees with the proposed changes outlined in the consultation document to allow the use of non commercial window displays and welcomes any changes to the rating system that could be used to reward businesses that invest in green technologies and seek to reduce their carbon footprint.

18. Finally the Chamber recognises the problem of vacant units in our town and city centres and the need to incentivise small business start-ups. We would like the Minister to examine rate concessions for new business start-ups locating in town and city centres.

The Londonderry Chamber hopes that DFP finds these comments helpful and that account will be taken of the views expressed by this organisation.