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News - 23 September 2007

Does London's Crossrail spell end of Business Improvement Districts (BIDs)?

The government is expected to give the go-ahead this week to the hugely ambitious east/west rail link across London. Examination of the detail might give some clues about the future of the UK’s BID programme.

Crossrail, the plan to build a mainline rail line from Maidstone to Shenfield with  tunnels carrying the line under the heart of London, is set to be approved after an 18-year wait.

The Government is preparing to announce that it will directly fund a third of the £16 billion cost of the scheme. Another third will come from loans against future passenger fares but it is the proposed source of the last third that gives some clues about the future of BIDs.

The government proposes that a supplementary business rate (SBR) levied on the capital’s businesses will raise over £5bn towards the total cost of Crossrail. So far it is unclear what size of business it would be levied upon.

Supplementary business rates, which could be imposed by local authorities and retained locally to be spent on whatever projects they deemed suitable, were first mooted by Sir Michael Lyons in his review of local government finance. At the time the Treasury seemed cool on the idea but it was also promoted in the recently published sub National Review of Economic Development & Regeneration.

Their use to generate funds for Crossrail would indicate that the government thinks the principle is worth pursuing in practise and the response of businesses in London could determine whether a national scheme is implemented.

If SBRs are introduced nationally an allowance will be made for towns and cities that have an existing BID so that the SBR would be reduced by the amount of the BID levy but it is unclear whether this would be the case for future BIDs established after the introduction of any SBR scheme.

The effect of such a supplementary rate on future Business Improvement Districts might be fatal. Businesses vote on whether they want to support a BID whereas the SBR would be compulsory and they would undoubtedly remove any business appetite for BIDs despite their obvious success and democratic credentials.

On the positive side in Brighton & Hove the business community has a positive relationship with the city council and the implementation of any SBR scheme locally would be accompanied by widespread and meaningful consultation with businesses.

Read related items on:
Brighton and Hove
Brighton & Hove City Council
Lyons, Sir Michael

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