The Business Rate Supplement (BRS) Bill, announced in today’s Queen’s speech, may effect Business Improvement Districts (BIDs).

A BID is a public-private partnership in which businesses in a defined area elect to pay an additional tax in order to fund improvements to the district's public realm and trading environment.

The purpose of the Bill is to give ‘upper tier’ local authorities the power to levy a local supplement on the business rate and retain the proceeds for economic development. It involves the payment of 2p per pound supplementary business rate supplement (BRS) levy for this.

But the British Property Federation(BPF) claim the Business Rate Supplement (BRS) Bill will effect the funding for BIDs.

James Anderson, policy officer at the BPF, said: ‘Times are tough for owners and occupiers and while the additional funding raised through the business rate supplement will benefit London’s infrastructure in the long term, we are concerned that funding for existing business improvement districts (Bids) may suffer as a result.

‘We thereby urge the government to amend the existing legislation to allow BIDs to raise finance from property owners on a mandatory basis, where they consider it appropriate and possible to do so. This will be fairer for those landlords that already make voluntary contributions and occupiers’ such as small businesses, who BIDs might turn to for any funding shortfall as a result of the business rate supplement.

The BPF said BIDs traditionally raise the majority of funds from the largest occupiers; exactly the same bracket likely to be hit with the rates increase.

The change will mean BIDs are particularly exposed to a funding freeze from these occupiers when they go up for re-ballot in 2009-10, as occupiers act to downsize their spending in light of the credit crunch.

To sustain their current incomes, many BIDs are likely to have to seek alternative sources of funding from either small occupiers or from property owners.

The BPF said it would lobby for: ‘ Bids to be given the power to choose whether to include property owners in their schemes where they consider it appropriate to do so.

'This facility is available in Scotland and would be welcomed south of the border to help mitigate the impact of the BRS on small occupiers and help ensure BIDs have sufficient funding to continue their work.’