FSB News Release
 
PR 2009 41
 
Issue date: Monday 06 July 2009
 
FSB report calls for urgent help for village shops and pubs at risk of closure

As the UK's leading agricultural show welcomes visitors for the final time this week after 160 years, a new Federation of Small Businesses (FSB) report warns that our village shops and pubs could go the same way as the Royal Show unless urgent action is taken. 

Single shops, pubs, post offices and petrol stations in small rural settlements are eligible for vital funds from the Local Authorities which could help them through the recession, but according to the FSB, 47 per cent are currently missing out.

Village businesses, such as shops and pubs, are entitled to 50 per cent relief on their business rates under a Rural Rate Relief scheme, which also gives local authorities discretionary powers to grant up to 100 per cent business rate relief.

However, many local authorities fail to offer significant relief above the mandatory 50 per cent to half of all small village firms, which could mean the difference to those firms between survival and closure. 

The village shop network is losing between 300 and 500 shops each year, and 13 rural pubs close each week, yet the existing Rural Rate Relief scheme is not being fully used to help save these businesses, which form the heart of village life. 

In a poll of FSB members, 44 per cent said they relied on a sole pub, shop, post office or petrol station in their area. They cannot afford for these small businesses to fail.

The FSB's report, A new approach to the rural economy, calls for the Treasury to make more funds available to local authorities so they can grant 100 per cent rate relief for a fixed period of just 12 months to help these vital village business weather the downturn.

The report outlines a mixture of short term and long term actions the Government must take to relieve the problems of the rural business owner and plan for a successful rural economy of the future. These include:

• A planning system that encourages the development of a vibrant and diverse business community in the countryside
• Incentivising local authorities to encourage tourism
• Greater fiscal help for our rural small businesses

Linda Walton, Rural Affairs and Tourism Chairman, Federation of Small Businesses, said:

"Every week we hear of the death of village shops and pubs yet the Rural Rate Relief  scheme, which was specifically set up to help these rural businesses, is being chronically underused.  Village shops and pubs are at the heart of village life and the failure of such a business can devastate local communities, the Treasury must ensure our village shops and pubs do not go the same way as the Royal Show by enabling our local authorities to give 100 per cent rate relief during this downturn."

Ends

Notes to Editors

1. The FSB is the UK's leading business organisation with over 213,000 members. It exists to protect and promote the interests of the self-employed, and all those who run their own business. More information is available at http://www.fsb.org.uk.

2. The FSB's Rural Recession Rate Relief Scheme (England):

Rural businesses are suffering during this economic downturn like their urban counterparts.  However, the failure of a vital business in a small village can devastate a local community and the FSB believes urgent action is need to give relief to these businesses that are so often at the heart of village life.

Currently there is 50 per cent mandatory rural rate relief for some village businesses with local authorities having the discretion to grant up to 100 per cent relief.  However due to local government financial constraints many councils fail to offer significant relief above 50%.  We would like to see the Non Domestic Rates pool fund topped by up by the Treasury to enable Local Authorities to grant 100 per cent rural rate relief to those vital services and businesses which are at the heart of rural community life.  The FSB would like to see the Rural Rate Relief system amended to help these hard hit communities for a period of 12 months.
At the moment the following types of businesses, which are based in rural areas with a population of below 3,000 and are within a rural settlement area, qualify for 50 per cent mandatory rate relief with local authorities able to grant further relief at discretion. 

• Sole Post Offices / General Stores / Food Shops

At the moment sole post offices and general stores, with a rateable value of up to £7,000, qualify for 50 per cent mandatory rate relief.

• Sole Pubs / Petrol Stations

At the moment sole pubs and petrol stations, with a rateable value of up to £10,500, qualify for 50 per cent mandatory rate relief.

The FSB is calling for the Non Domestic Rates pool that local authorities contribute to, to be topped up by the Treasury to enable local authorities to grant 100 per cent rate relief for a period of 12 months.  We propose that, following the topping up of pool funds by the Treasury, there would be a mandatory duty for local authorities to extend 100 per cent rate relief for the above businesses for the period of 12 months.

We propose these changes to last for 12 months with a mandatory review to if see a further time extension, based on economic circumstances, is necessary at the end of this period.

3.  To the end of December 2008 6,600 business received mandatory Rural Rate Relief (also known as Rural Village Shop relief).  Therefore, 3,500 of these businesses were in receipt of discretionary relief, which amounts to 53 per cent of businesses. Therefore, 47 per cent are missing out.

Contacts
 
Stephen Alambritis: 020 7592 8112 / 07788 422155
Sophie Kummer: 020 7592 8128 / 07917628998
Prue Watson 020 7592 8121 / 07825 125695
Marc Shoffman 020 7592 8113 / 07595 067068