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Purpose of
this document |
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The BRC |
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Background |
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Retailers
and BIDs |
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A National
Register |
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Adding Value |
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Additionality |
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Key Performance
Indicators |
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Measurement
& evaluation |
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The Boundary |
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The Business
Plan |
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|
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Property
Owners |
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Billing |
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Levy |
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|
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Structure |
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The Board |
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|
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Petition |
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Turnout Threshold |
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The Vote |
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Local Authority |
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Protection |
Purpose
of this document
This document is
a communication to Government and other stakeholders and sets
out our preferred position on a wide range of issues related to
BIDs. It is the product of continual and wide-ranging consultation
among the BRC membership and the expertise of the BRC BIDs Working
Group. It was first published in 2002 and this latest version
was updated in January 2004.
The BRC
The British Retail
Consortium (BRC) is the lead trade association of UK retailing
and exists to defend and enhance where possible, the economic,
political and social climate in which its members operate. BRC
members sell a wide selection of products through centre of town,
out of town, rural and virtual stores. Reflecting the diversity
of modern retailing, BRC members include the large multiples and
department stores, charity shops and small and medium sized independent
retailers. There are over 188,000 VAT-registered retail businesses
in the UK operating in more than 322,000 retail outlets. In 2002
retail sales were an estimated £234 billion. The retail
industry employs nearly three million people and accounts for
almost 11% of the total UK workforce.
Background
On 24 April 2001
Tony Blair announced the Governments intention to introduce Business
Improvement Districts (BIDs) in England. They set out further
details in the White Paper Strong Local Leadership - Quality Public
Services published in December 2001. This was followed by the
publication of the Draft Local Government Bill in June 2002, which
set out the provisions for enabling BIDs. The Queen's Speech on
17 November 2002 announced that legislation for BIDs would be
brought forward in the following Parliamentary session. The Bill
received Royal Assent in September 2003. Detailed regulations
bringing into force the BID provisions of the Local Government
Act are currently being drafted and should pass into law in the
summer 2004. It is likely that the first BID will not be able
to could gain operation until at least October 2004, although
most will not commence until April 2005.
Retailers
and BIDs
The BRC recognises that, if properly implemented, business improvement
districts could provide retailers with an important tool to co-ordinate
collective investment to improve their trading environment. BID
services however must be genuinely additional to statutory and
accustomed local authority provision and deliver tangible benefits
to the retail community.
For retailers the key benefit from successful BIDs would be improvements
to the bottom line through higher footfall and sales. The drivers
for this commercial change will vary from location to location
but several key priorities are clear:
· Security: A key problem in maintaining anti-crime
measures has been the inability to generate sustainable funding.
We view BIDs as an important tool for tackling retail crime and
crime more generally. The BRC views BIDs as an excellent opportunity
for local businesses, in partnership with the police and other
stakeholders, to invest in local anti-crime initiatives.
· Cleanliness & environment: A second element
of improving the public realm and the retail offer is the standard
of cleanliness and the quality of the environment. In our view
BIDs should, once baseline service delivery has been agreed with
a local authority, aim to improve cleanliness as a top priority.
Investments in the physical environment, including streetscape
and infrastructure may also be important, depending on the location.
· Marketing: Promotion of an area can drive footfall
through branding, advertising and events to raise awareness of
the retail centre and create a recognised identity. We expect
BIDs to place significant emphasis on increasing the profile of
retail centres.
· Local Government: For retailers another benefit
of a successful BID could be the opportunity to have effective
dialogue with local government across a range of issues. BIDs
could improve the relationship between businesses and local government,
by creating feelings of trust and shared aims and objectives.
A National
Register
The retail sector, particularly national multiples, will shortly
be challenged to respond to requests for support, participation
and funding from many tens or even hundreds of BID sites. Retailers
need to be able to plan and allocate resources, both financial
and human, as far in advance as possible. The situation regarding
the location and status of BIDs nationally is currently very confusing
as, the ODPM pilots apart, there is no single source monitoring
BIDs. A BIDs Register, together with a regulatory requirement
for BIDs to inform the ODPM of their progression, is absolutely
essential. This would prove a vital tool for businesses and would
no doubt have benefits for Government and other organisations.
Adding
Value
A BID must add value to a ratepayers business, and show that the
BID levy is an investment in the ratepayers business. For retailers,
added value is likely to be in the form of increased footfall
and/or sales. A BID must focus on the needs of the business community
and respond accordingly, making a sound business case for its
existence.
Additionality
In adding value to the ratepayers business, the BID must ensure
that its services will be entirely additional to those already
provided by the public sector (in most cases the local authority).
Baselines of current services must be agreed with the local authority.
These would quantify services provided as part of the public sectors
statutory obligations as well as those offered outside such obligations.
It is imperative that the BID and its supporters can be confident
that its services add to and do not duplicate those already considered
to be the responsibility of the public sector. Baselines will
also help prevent any "creep" of the BID's role, following
any reduction in the public sectors service provision.
Key Performance
Indicators
For ratepayers to vote on a BID proposal, they must have a clear
understanding of what the BID promises to deliver. Ratepayers
will likely base their voting decision on these KPIs and their
potential benefit to the ratepayers business. The KPIs most important
to retailers will normally include assurances of an improvement
in footfall or sales or possibly a reduction in existing costs.
The development of KPIs should also give those proposing (and
later running) the BID equally clear understanding of their own
goals, providing all parties with a reference point as to the
progress of the BID.
Measurement
& evaluation
The development of Key Performance Indicators must go hand in
hand with a clear description of how these are to be measured
and evaluated. This is a common-sense requirement so that analysis
of the BIDs performance is uniform by all parties.
The Boundary
The BID boundary will be a factor in the services the BID
is to deliver and the amount of funds it will be able to raise.
A boundary too narrow may restrict a BID's revenue potential while
conversely a boundary too wide may dilute its purpose and service
delivery. It is also essential that the boundary be a fair one,
omitting ratepayers who would not benefit from the BID or have
less need for the BID's services. Examples would include businesses
on the periphery of the boundary that would not gain from the
BID or are already paying a similar levy to another organisation
(e.g. to another BID or businesses located within a shopping centre
paying a service charge).
The Business
Plan
The BID Business
Plan, or Proposal Document, must be a comprehensive guide to the
purpose and practicalities of the BID, including all the features
set out above. The document should be a single point of reference
for both those running the BID and also those ratepayers expected
to approve the plan through the vote. The Business Plan should
include details of how the BID is structured, what it intends
to achieve, which classes of ratepayers will be expected to pay
and how much that figure would be. It should contain details of
existing baselines, how services will be additional, Key Performance
Indicators and systems of measurement and evaluation.
Property
Owners
The BRC, along with most other key stakeholders, believes
that the involvement of property owners will be crucial to the
success of BIDs. Property owners have the long-term interest in
the areas they are based, benefiting from any local improvements
through property and rental values. Almost all existing overseas
BIDs charge property owners rather than occupiers. Despite vigorously
communicating this to Government, no facility to levy a mandatory
charge on property owners was placed in legislation although the
Government has agreed to conduct a review of this issue in 2006/07.
In the meantime, BIDs will levy occupiers through the business
rates system, seeking voluntary contributions from other stakeholders,
such as property owners and the local authority. Many retailers
are unlikely to support a BID that does not have some degree of
funding from property owners.
Billing
The BRC believes
that the BID levy should appear as an additional charge on the
main rate bill. This would allow the local authority to issue
one bill, minimising their administration costs and simplifying
the process. The bill should be very clearly split up into its
component parts. The use of a separate BID revenue account and
a clear explanation on the Bill of what the BID levy amount is
should be enough to satisfy most ratepayers.
Levy
Those developing
BID proposals should be supported by regulation encouraging methods
of calculation that are simple and fair. The BID levy could be
a percentage of the rateable value of each ratepayer in the BID
area, but could vary by business type if required. Such a system
would allow local BID proposers to take account of ratepayers
with different incentives involved (e.g. retailers v. office-occupiers).
The BID levy should not be
a percentage of the rate bill of each ratepayer in the BID area.
As each ratepayer's bill will vary each year due to transitional
relief and changes to the multiplier, it will be difficult for
the BID to budget if the levy is based on individual rate bills.
Structure
The Government does
not intend to regulate for the structure of a BID, leaving each
individual BID to determine its own system of governance. The
BRC believes that this is mistaken, and that a BID should be a
company limited by guarantee with a Board at least 50% constituted
by private sector members. This is necessary to give the private
sector confidence in the BID structure in that it has identifiable
and easily understood operating criteria, with existing regulations
that govern its operation. This confidence also extends to the
management of the BID, giving those tasked with its operation
an entity entirely separate from any other local initiatives.
The Board
Private sector influence is a necessary requirement to provide
focus and ensure that the BID services a business need, especially
as ratepayers will be the principal source of funding. A BID should
be required by regulations to have 50% private sector representation
on the Board. The makeup of the Board should be clearly set out
in the BID proposal, indicating the groups represented and their
proportion of the total Board.
Petition
It is in the interest
of both those proposing a BID and ratepayers that only BIDs that
fulfil a genuine business need reach the stage where a ballot
of ratepayers takes place. This avoids time-wasting ballots that
are likely to fail and encourages those developing BIDs to produce
a thoroughly researched and properly targeted proposal.
Those proposing a BID should therefore be required to prove an
initial degree of local business support. The BRC supports the
proposal set out in the White Paper that suggested a petition
displaying 5-10% business support before a BID can be established.
Turnout
Threshold
Those proposing
a BID must have sufficient incentive to encourage participation
and develop awareness of the proposed BID among ratepayers. If
the only legislative requirement for a BID is that it gains a
simple majority of those voting (by number and rateable value),
it is entirely possible that with limited publicity, a very small
minority of businesses could be persuaded to push through a positive
BID vote. Smaller retailers, particularly independent operators,
may well not appreciate the significance of the ballot or may
not be able to meet time constraints for the deadline. A non-vote,
therefore, should not be seen as passive support. A poor turnout
can only signify a lack of business support and/or poor communication
by those proposing a BID.
The BRC has, in common with
many existing overseas BIDs, proposed a 60% turnout threshold.
For the reasons set out above we feel that a BID must secure widespread
support and that this requirement must be enshrined in legislation.
The Vote
The BRC believes
that the ballot should be conducted by post (sent to the same
address as the rates bill through the list held by the local authority).
Every party liable to pay the levy should be sent notice of the
ballot, along with a full business plan proposal, at least 56
days prior to the opening date of voting. The ballot itself should
be conducted by post over a 6-week period. This is the minimum
time frame that will give local businesses adequate time to decide
on the merits of the proposals.
The ballot paper, its purpose
and consequence, must be very clearly marked in such a manner
that no person could reasonably be expected to misinterpret or
misunderstand its meaning. The ballot must also be constructed
in such a manner as to be transferable to another person. This
is essential in companies where decision makers for BIDs may operate
in different departments to those who pay the rates bill, or where
occupiers pass off all or part of their BID liability to landlords
and so also wish to transfer the ballot.
Local
Authority
The involvement of the local authority with a BID is likely
to be a prerequisite for many retailers. While a BID should be
a business led body, the BIDs services will often build on and
complement those already provided by the local authority and therefore
the two organisations should properly co-ordinate their activities.
In some instances, it will be appropriate for the BID and the
local authority to co-fund additional services and both have responsibility
for elements of particular projects. It is very unlikely that
retailers would be able to support a BID that the local authority
was not supporting, even if it did not intend to use its power
of veto.
Protection
The BRC believes that the local authority must have a duty
to ensure that the BID will not place an unreasonable burden on
occupiers, and should be required to use its power to veto the
BID where certain ratepayers would be unfairly penalised. This
could apply where a BID boundary is constructed to included properties
on the periphery that would gain zero benefit from the proposal
but have insufficient votes to block the ballot, or where BID
boundaries overlap.
