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Bid for change, by Nick Raynsford

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18 March 2005

They've worked wonders in Canada and the US, and now they're over here to do the same. Nick Raynsford explains how local firms can use Business Improvement Districts to help transform their town centres

During the 1980s and early 1990s, there was growing anxiety about the state of many town centres in England. They were becoming rundown and unattractive, antisocial behaviour was increasing and out-of-town shopping centres were attracting consumers away. The result? Many town centres were locked in a downward spiral of decline and residents were frustrated by the loss of local retail outlets.

The government took several steps to tackle and reverse these trends, including changes to planning policy to make town centre investment more attractive and to restrict out-of-town development. But it was also clear that more needed to be done to make town centres and other business districts successful. It is against this background that the concept of Business Improvement Districts – or Bids – was born in England. These marked a growing recognition that town centres needed better management and support, as well as innovative improvements and marketing, to attract new business, customers and job opportunities.

Bids are voluntary, business-led arrangements, where firms in a defined area vote whether to pay a levy for additional services or activities beyond those already provided by local authorities. If the majority vote 'yes', all the specified businesses in the Bid area must pay the levy.

A Bid might cover all the businesses in an area or be limited to certain sectors, such as retail or entertainment and leisure. It can also be restricted to those occupying premises over a minimum rateable value, so excluding the smallest firms from the levy.

The idea originated in Canada in the early 1970s, but then spread widely throughout North America, where they have a track record of success in re-invigorating town centres. We wanted to import that success, but some modifications were needed to ensure that the model was compatible with our method of local taxation. In this country, business rates are paid by the occupier or leaseholder – not, as in the US, by the owner or freeholder.

Bids can help to increase property values by enhancing the attractiveness of local areas and, as such, there is a case for freeholders to contribute financially to schemes. However, making property owners liable to pay the levy would have involved a fundamental change to local taxation arrangements, including a new system for registering commercial property ownership and for establishing a liability on freeholders. Not only would that have delayed the introduction of the scheme significantly and added to the bureaucracy, it would also have increased the cost.

Therefore, we decided to collect the levy through the existing non-domestic rates system and encourage voluntary contributions by freeholders.

We also wanted to keep red tape and central government control to a minimum. Indeed, the Bid idea was one of many measures announced in the 2001 local government white paper that were designed to encourage local authorities and businesses to work together to improve their area. The scope of individual schemes is entirely the choice of businesses in the locality, based on what would improve the commercial environment for them. The only check is that the businesses affected must vote for it.

So what will Bids actually deliver? Their underlying objective is to secure real improvements to town centres and other business areas over and above those already being funded through local taxation. These improvements can – and will – take many different forms.

One is the appearance of the area. Quantities of litter and discarded chewing gum can deter shoppers, for example. The Bid proposal might pay for more frequent litter collection and chewing gum removal patrols.

Perhaps the area looks bleak and unattractive. Some landscape improvements would create a more attractive environment – not forgetting the maintenance services to ensure that the benefits are enduring.

If people do not feel safe, they won't come to an area to shop or to relax, to do business or to work. Extra street lighting, CCTV cameras or reassuring wardens might be the answer.

These benefits are not restricted to town centres. The Bid model is flexible and can be applied to other business and commercial centres, such as business parks and industrial estates. Here the improvements will often focus more on safety and security issues or creating a better environment for recruiting and retaining employees – but the local businesses will still determine their own priorities.

My point here is that by delivering outcomes centred on helping to improve business, Bids can make a real difference to town centre and other business environments and how they are managed.

Several of the Bid schemes, recognising the growing importance of the night-time economy, are planning to have a '24/7' effect on their neighbourhoods. The Coventry City Centre scheme, for example, provides for additional marketing, security and safety measures – including early warning of potential troublemakers and a visible presence on the streets until 4am. The Kingston Bid also tackles both ends of the day and includes business development advice, upgraded street lighting and community rangers working seven days a week to tackle antisocial behaviour.

To get a Bid off the ground, a proposal has to be put together with input from the businesses in the planned area. Co-operation and consultation at a very early stage is crucial, as there will have to be a ballot before the scheme goes ahead. To avoid wasting resources on ill-thought-out plans, if less than 20% of businesses in the area vote in favour of the Bid, there is some financial liability on the proposer. So a carefully developed proposal, with a sound business plan showing how the proceeds will be applied to achieve real benefits, will be the bedrock of a successful scheme.

Furthermore, to set up the ballot and the subsequent scheme, businesses need to work closely with their local authority. Bids will thrive where there is real partnership between local government and the private sector, and we would encourage councils to become actively involved in Bid partnerships and to help them develop their proposals. Many recent developments in local government policy encourage councils to form partnerships with organisations from the public, private and voluntary sectors – and Bids are no exception.

It is worth going into a little more detail about how Bid ballots work. Before the ballot, all businesses taking part must be given full information about the financial implications for them if the scheme goes ahead. Each hereditament in the Bid area is then given a vote: for the ballot to be successful, there must be a simple majority 'yes' vote, both in terms of the number of votes cast and by rateable value. This 'dual key' mechanism ensures that neither small nor large businesses can have a disproportionate impact on the result.

If there is a 'yes' vote, the levy is binding on all businesses in the area. Some say this is unfair to businesses voting 'no', but it would be much more unfair if some businesses reaped the benefits without helping to foot the bill.

After a 'yes' vote, the local authority collects the levy from the occupiers or leaseholders in the area. Voluntary contributions from freeholders can then be added to the pot. The money is ring-fenced for services and activities specified in the Bid scheme and cannot be spent on anything else.

I am keen to encourage the development of robust Bids because they can offer real benefits for all, but it is important that the proposals are well-thought-out and have the full endorsement of local businesses. If businesses do not think they will get value for money and cannot see how it will benefit them, then – quite rightly – they will not vote for it.

If local businesses see real benefits, they will want to seize the opportunity, bring forward innovative ideas and vote the Bid in. Since Parliament gave the green light to the Bid regulations in September 2004, this has already started to happen all over England. Businesses have already voted in favour of schemes in Kingston, Coventry, Plymouth and central London, to name only a few examples, while proposals are also at an advanced stage in many other areas, including Birmingham, Lincoln, Rugby and Bristol.

In summary, Bids is an exciting concept that can boost the competitiveness of local businesses. But their benefits will not be felt by businesses alone: people from local areas and beyond will enjoy a cleaner, safer, more pleasant environment in which to shop, work and socialise. Bids are therefore a real win:win and I look forward to seeing many more 'yes' votes for robust schemes over the coming months.

Nick Raynsford is the local government minister

PFmar2005

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