Monday, 6 March 2017

Small Local Businesses v Eton

Via MBK from The Sunday Times:

Eton College is eligible for an 80% discount on its business rates because, like most other independent schools, it is a charity. This saved it almost £500,000 last year — and will be worth more than £630,000 this year.

But the discount is a source of anger and resentment among the owners of small businesses on the nearby high street, which are seeing their business rates rise by up to 15%...

Eton Antique Bookshop on Eton High Street just misses out on the exemption from business rates as its rateable value is rising from £11,000 to £12,750. It will pay £1,425 this year — a sum it can ill afford thanks to falling tourist numbers.

That's £30 per week.

... Aimee Fleet, owner of the Wags Pet Boutique a little further up the High Street, said the small business relief she had been granted this year was the only thing saving her from going under.

“I paid £6,000 in business rates last year and am only getting a slight reduction next year because I am getting some small business relief. If my rates had gone up like others around here, I wouldn’t last more than another year.

“It’s not much of a support for small businesses, is it? I don’t know what I am paying for, either, because the council doesn’t collect waste any more from us and we have to pay for cardboard to be collected.

If she is renting, she will be paying a damn sight more than £6,000 in rent. Does her landlord provide the public transport, collect the rubbish, light the streets, provide the overall ambience and other local amenities which draw tourists there? Does he heck. So what is she paying him for, above and beyond a few thousand quid for the building? And why is she not complaining about the rent?

Some of the comments are spot on:

dcch: This is a silly article that seems to have been manufactured in the news room. The new business rate wouldn't be any more affordable if Eton paid it too. The school is not competing with the local shops so the same complaint about Eton enjoying discounted business rates could be made by any business in the country. The idea that an organisation should be stripped of charitable status because it turns over a lot of money is particularly fatuous.

David at Wateroakley: On the basis of 1300 pupils, the rebate is worth about £484 per pupil. Senior school education in the state sector is about £4,500 per pupil. On that basis, Eton College is potentially saving the state incurring additional costs of about £5 million.

Stefan: If you don't like it, then go set up shop in a town that doesn't owe its existence to a historic institution like this (so better avoid Cambridge and Oxford then).

Neil Alldritt: Would the shops survive if it were not for Eton being there?

The Read Lines: Roolz is Roolz - It is a charity, education establishment and fancy dress party. Ok so it is for the toffs but if you live in Windsor it all sounds pretty toffish to me. I am sure it has its parts where you don't want your kids mixing with, but my guess is that the business' set up there to sip some of the cream. At least you did not mention Amazon.

Clearly, the Business Rates for "charities" is a nonsense because charitable status is at the bureaucrats' whim, it encourages inefficient use of land and buildings and is a tax break for landowners, but the points stand.


Bayard said...

"That's £3 per week."

£30 pw, surely, or am I missing something?

"And why is she not complaining about the rent?"

She's probably an owner-occupier. When the OOs realise that higher business rates mean lower land values for their little plot, there'll be even more squealing.

There appears to be a feedback problem with the fact that raising business rates lowers rents, because the rateable value is based on the rentable value, so if that goes down, the rateable value goes down and the rates go down, so the rents go up, so the rateable value goes up and so it goes on.

Bayard said...

"The new business rate wouldn't be any more affordable if Eton paid it too"

dcch rather misses the point. The point is not that the ratepayers of Eton should be better off, but that Eton College should be worse off.

Mark Wadsworth said...

B, I have amended.

As to feedback, it is a circular calculation. If BR is 48% of net rent after BR, it will level out at 48/148 of gross rental value.

dcch, judged by is own standards made a fair point.

mombers said...

Yes but what about the terrible cost to society that Eton alumni have imposed via centuries of dominance of Westminster :-)

ontheotherhand said...

Eton owns a lot of the property in the town including the shops. It could collect more rent by getting Sports Direct and McDonalds on the High Street rather than tailors and art shops. Does that spice up the calculations?
Does the rateable value depend on the Permissions for Use of the Land? i.e. even if it lost charitable status, would College Chapel get permission to be rented as a conference venue, or the playing fields for paintballing? Otherwise, as football pitches and an ancient building in need of maintenance, I don't suppose they are worth much rent?

Mark Wadsworth said...

M, that's politics, not tax.

OTOH, excellent points, correct AFAICS and agreed.

Graeme said...

Given that the chapel dates from the late 15thc. there is probably a gang of stone-masons permanently employed in repairing it plus a whole ecosystem of stone quarries. I bet the tax raised from that supporting network in terms of PAYE, National insurance etc far outweighs the business rates that would be levied.