The use of bailiffs by councils to collect unpaid business rates in London has rocketed by more than a quarter over the past two years, hammering home how the punitive tax is crippling the High Street.
The cash crisis faced by many small businesses in the capital is reinforced by data showing that more than one in six commercial premises received a court summons last year.
The figures will fuel the debate over retailers paying a disproportionate amount of business rates — property taxes linked to the rateable value of commercial premises and the Retail Prices Index — which are frequently cited as a reason for chains collapsing. In the last month alone, retailers including furniture chain Dwell, fashion player Internacionale and toy specialist ModelZone have folded.
Bailiff instructions to business premises, mostly retailers, leapt 28.5% between 2010 and 2012 across the 10 London authorities covered by Freedom of Information requests. The rise in Wandsworth was 136%.
Although big retailers often hail the wealthy capital for being their best-performing region, London’s small businesses are squeezed by the country’s highest business rates. Retail campaigner Paul Turner-Mitchell, who submitted the FOI requests, said: “Year after year we’re seeing big rates rises. We’ve had two recessions and virtually no growth in the last five years. Yet the Government’s medicine to support businesses has been a £2 billion rise in business rates in the last two years.”
Of the 121,518 commercial premises covered by his research, 12,790 were referred to bailiffs for collection. The research was carried out on behalf of the review of the High Street being conducted by Bill Grimsey, the former boss of DIY retailer Wickes and the now-defunct chain Focus DIY.
He said today: “It’s clear to me that a root and branch reform is needed to make business rates fair and equitable and less of a burden on retailers as a whole. This is what my review will be looking at and we’re working hard to develop alternatives.”
The British Retail Consortium estimated that shops will have had to pay an extra £175 million in business rates bill from April when the latest 2.6% rise came in.