When on March 24th, 2020 the Government announced its support for small businesses and introduced a Covid-19 grant scheme “to cover fixed costs”, it could have chosen several criteria for eligibility, such as size of company turnover or having less than 5 employees.
Instead it chose the good old business rates scheme – awarding a cash grant of £10,000 for all businesses with rateable value of £15,000 a year or less and thus than in receipt of small business rates relief or rural rates relief.
In many ways this was sensible criteria to capture the smallest businesses – and probably captures most of the market. However, some small businesses have fallen between the cracks, including many who rent space in serviced offices. Such businesses usually pay for one fixed all-inclusive monthly service agreement to their office provider to cover their fixed costs for rent, rates and service charges and this operator sorts out the rating assessment for the overall building.
The problem has arisen because in several cases, the operator or the VOA, (Valuation Office Agency- that assesses the rates) has not yet split the assessment of the overall property into individual businesses space units or was in the process of doing so prior to the Covid-19 outbreak. As a result, many small companies in such space do not have individual business rates assessments. As things currently stand, such businesses are therefore not able to claim the much-needed grants.
We have estimated that there 10,000 smaller businesses in serviced offices without an established individual rating assessment, which represents about 5% of the small business market. In other words, there are £100 million of small business grants out there that can’t be claimed.
So, what can we do? Our business rates team at Colliers looks after 90% of this serviced office market, including advising WeWork and IWG who are backing our efforts to try and help sort this out. We have written to the Treasury asking it to show some flexibility in its approach to such businesses and to inform the Billing Authority who are handling the grants that such small businesses are an exceptional case. We have asked to be allowed to illustrate who should be eligible for the grants, on a building by building basis, by making individual split assessments. We believe we would be able to do this quickly and have said we will carry out this work at no cost to the Government or the individual occupiers who could and should receive the grant.
We have written to individual billing authorities asking them to show discretion and allow such companies to claim grants and we are talking to other small business industry bodies about our campaign. We are also talking to the businesses themselves, trying to advise them on the best way out of this mess.
Small businesses are the lifeblood of our economy and in these difficult times many are struggling to stay solvent. It seems unfair that by using the business rates system as a way of assessing whether a company deserves a grant, some of the most entrepreneurial businesses in the country will fall between the cracks and not receive the much needed help they deserve, without which many will go under. This was not the government’s intention and we call on it to rectify this as soon as possible.
John Webber is Head of Business Rates at Colliers International