The general election is upon us, but a starting gun for next year’s London Mayor election was effectively fired at Centre for London’s London conference last week, where the five serious candidates made pitches to an influential audience. Interestingly, little was said by any of them about the “cost of doing business” crisis being experienced by many small firms in the centre of the capital.
A year ago, the Federation of Small Businesses (FSB) wrote to the major London landowners – who own over 250,000 square feet of commercial space – calling on them to help their small business tenants with a new supportive mission statement. We called for the major landowners to support tenants who were:
- Adversely affected by their rent reviews.
- Concerned with the level of account management by landlords, meaning the amount of information and practical support they receive.
- Being forced to opt out of the 1954 Landlord and Tenants Act that provides extra protections to small tenants.
Only two landowners have provided what we asked for. Meanwhile, the situation of many London small businesses has become worse.
The business rates revaluation that came into effect from 2017 has meant the gross business rates bill for 2019/2020 increased by £728.20 million nationally. Businesses in London are faced with paying £234 million of that total. FSB data shows that the average small business in London with commercial premises now pays 27 per cent of its turnover in rents and rates, compared to 20 per cent in 2016.
We have heard of too many cases of landowners riding roughshod over their smaller tenants, rather than finding ways to support the independent small businesses who make up over 99 per cent of the London economy. For small tenants to survive and thrive, they need landlords to be on their side, working with them to navigate the complexities of running a business and to shrink the high cost of doing business in the capital. In short, to develop a “moral compass”.
Responsible landownership is also essential to strengthening the relationship between large and small businesses – a relationship that is in decline because of the poor payment culture running rampant in the UK economy.
We urge the landowners and estate management and property investment companies who own the majority of commercial space in London to stand up and be counted and incentivise small firms to remain in London or take up new space here. And we call on all candidates for mayor to find a carrot-based policy approach that will appeal to the good nature of landlords and encourage them to help their small business tenants succeed.
With Small Business Saturday just a month away, now would be a great time to make a grand policy announcement to that end.
Matthew Jaffa is Senior External Affairs Manager (London) of the Federation of Small Businesses. Photo is from London Assembly economy committee’s 2017 report Helping SMEs to Thrive.
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