Much has been written about the upcoming business rates revaluation and the significant additional burden that this will place on businesses, large and small. Comparatively little, however, has been said about the impact that this in turn will have on our town centres and business districts.
Ultimately, business rates are a property tax rather than a corporate one, and for some companies this means that there is a relatively straightforward solution: move location.
Businesses currently located in areas from Victoria to King’s Cross will be considering their options. Most worryingly for the locations worst hit by rates rises, the most desirable and influential businesses are also often the most mobile.
East London has undergone fundamental change over the last 10 years. In 2008 the Crossrail Bill received Royal Assent and construction started on Europe’s largest infrastructure project that would shift London’s economy East. That same year, the first iPhone was launched, a watershed moment in the fourth industrial revolution which would firmly take hold in East London with the “launch” of Tech City in 2010. All this before the Olympic Games put East London at the centre of the world for a month in 2012.
Read more: The remarkable rise of east London
Shoreditch, Old Street and Clerkenwell are unrecognisable from 2008. Tech and creative businesses arrived in the area due to its affordability and stayed because of the community of businesses, cafés, shops and the nightlife that sprung up around them. Rents increased incrementally, but a tech and creative cluster endured as businesses recognised the value of collaboration with their peers.
However, from 1 April 2017, rates will increase overnight to reflect seven years of economic development in East London. When added to the associated rental increases, this will be too much for many businesses to bear. Smaller, entrepreneurial firms in particular may decide their growth prospects are better in a cheaper location.
This has the potential to fundamentally redraw the London map, with the migration of more mobile businesses, often from the tech and creative sectors, across the capital. The more established East London locations are already suffering in some people’s eyes from over-gentrification, and a further migration of the creatives may well exacerbate the problem.
However, the law of unintended consequences means that the rates revaluation may well indirectly benefit a number of the upcoming East London locations. Already the likes of Whitechapel and Stratford are attracting major occupiers, but locations such as the Royal Docks are most definitely next on the list.
Silvertown, once the centre of the British Empire’s global trade, is capable of providing the heritage, connectivity and community that creative and digital businesses crave. The work underway to bring the urban-explorer-loved Millennium Mills back into use at the same time as Crossrail reduces travel times across London means that Silvertown will become a go-to home for businesses seeking dramatically lower occupational costs.
Successful regeneration projects such as King’s Cross and Victoria take years to deliver, and the painstaking process of creating new spaces, attracting businesses and growing rental values will be undermined by the sudden sharp increase in business rates.
The government is effectively punishing areas that we have grown to love. Is this anti-meritocratic system one which we are comfortable supporting or do we need a fresh approach?
The loss of affordable commercial space is a London-wide issue, and some areas will suffer and others will prosper. Businesses, big and small, developers and agents are for once all on the same side. We need a new system and should urge the government to rethink this rise. Otherwise London as we know it will change beyond recognition.