We offered an 80% business rate discount to fill empty shops

Posted by on 3 Nov 2015

Like many other high streets, Rochdale’s was hit hard by the recession that followed the banking crash of 2008.
Councils weren’t responsible for the financial crisis but they had to pick up the pieces afterwards and fill the holes left by the small businesses that went bankrupt or the chain stores like Woolworths that collapsed and disappeared forever.

One of the problems we faced was getting businesses to move into properties whose business rates were so high it made coming here too much of a gamble. The types of vacant properties we had were older buildings unsuitable for big retailers but too expensive for small independent businesses.
The business rates review planned for 2017 seemed a long way away; too long for us to sit on our hands and do nothing.

Research we carried out showed that one particular building had a rateable value higher per square metre than Harrods. Coupled with a vacancy rate of 22.7%, well above the national average of 13.5%, that’s the kind of statistic that makes you realise you need to find a new solution to an old problem.
We thought hard about how we could cut the vacancy rate by attracting new businesses to the town centre and decided we would create a £100,000 fund to, in effect, subsidise business rates for new businesses moving into the high street for their first two years of trading.

Those that qualify (the scheme is not open to betting shops, off licences, pubs, mobile phone shops, charity shops and pound shops) get an 80% discount in their first year and 50% in the second year of trading.
The result has vindicated our decision to spend money in this area at a time when local authority budgets are under severe pressure.

Investing in our town centres creates jobs and opportunities for local residents; we’re not just throwing money at private businesses, we’re investing in our local communities. Eight months on, our vacancy rate has more than halved and out of the 96 units on the high street only 11 are now vacant, down from 23. Some of the new businesses have signed long-term leases that take them well beyond the two-year discount period.
Among those that have signed up are a new chemist, a shoe repair and key-cutting business, and an independent restaurant run by a young entrepreneur who has seen the potential that Rochdale has. We are in the middle of a £250m regeneration programme and Marks & Spencer and Next have just signed leases for new stores in our proposed retail and leisure development. We are now closer to achieving the kind of vibrant town centre that combines popular high street chains with unique independent shops.

We are continually talking to other businesses and we also get enquiries from other councils who want to know how we have made this work. We have also found that some landlords in the pilot area have reduced rents in response to make their properties even more marketable. It’s clear that when they see the council making an investment, they are more willing to put their money in too, further breaking down barriers for new businesses.

It hasn’t been easy but we have made a relatively simple idea work. Established businesses are supportive because although they do not benefit directly, they have fewer empty units around them and more people are attracted back into our main shopping district, which is what every retailer wants. We hope that the business rates review does not mean we lose out financially and that we can retain some of the flexibility we need to encourage the right type of investment.

There’s still a long way to go and it’s not a long-term solution but Rochdale is turning a corner. We’re pleased we have been able to intervene in a positive way, it’s an unusual move for a council, but it’s paying off.