‘As transparent as a brick wall’: British firms fight back against ‘Business Improvement Districts’

Shops on Scarborough seafront. The Yorkshire Coast Business Improvement District, which is the largest in England, includes the resort. Photograph: LOOK Die Bildagentur der Fotografen/Alamy

As councils tighten their purse strings and strip services back to the basics amid a worsening local authority financial crisis, it is things such as flowerbeds, street cleaning, events and signs that go on the budget chopping block first.

That’s where Business Improve­ment Districts (Bids) step in – schemes funded by a levy on local companies on top of their business rates, with the money going to a private, not-for-profit company designed to help boost the attractiveness of the area.

But a backlash is growing against Bids, with dozens of cases across the UK of people refusing to make the mandatory payments and ending up in court as a result. Angry business owners argue that Bids are being created in towns and cities without proper consent, and that there is a lack of clarity about how funds are spent and how much value they add to the local area.

Some communities have even suggested that councils are pushing through the creation of Bids, because in some cases local authorities can cast several votes in a Bid ballot, as they own assets such as car parks and public toilets in the area.

If you’re going to have a five-year tax, and it’s a very one-sided Yes campaign, it’s not really very democratic

Shawn Rutter, campaigner

A Bid is created when it is voted for via a ballot that occurs every five years, which is open to all eligible businesses in the area. But opponents say because there is no minimum threshold for turnout and a lack of information for voters, they can be formed with very little support.

Shawn Rutter is an adviser with the campaign Against Bid, which offers advice to businesses that want to challenge the creation of a Bid in their area. He says the number of people seeking the group’s help is growing and now stands at more than 2,000.

“We just want to level the playing field to make it a more informed and open vote. If you’re going to have a five-year tax, and it’s a very one-sided Yes campaign, it’s not really very democratic,” he says. “For a lot of small businesses it isn’t a lot of money, but it is the principle with a lot of people. If they see it as a cost with no benefits, they think ‘why am I paying it?’.”

There are 335 Bids in the UK and Ireland, involving 132,962 businesses, with a further 61 Bids in development, more than two decades after the idea was first introduced in 2004.

The organisation British Bids, which represents Bids across the UK, says the growth shows “a continued enthusiasm and increasing perceived benefit”.

Its director of research, Chris Turner, says: “As the public sector has withdrawn from our public spaces, businesses have had to step up to the plate to provide a whole range of services. In some places, that’s everything from Christmas lights to hanging baskets, to street cleaning, to security. In other places, it’s about inward investment and marketing. The feedback we get from most businesses is it’s actually nice to be involved with something where people are coming together to try to make places better.”

Turner anticipates the importance of Bids will grow as councils struggling to balance the books slash non-statutory services, following a decade of government cuts and with demand for services increasing.

Councils including Birmingham and Nottingham have recently issued section 114 notices, in effect declaring bankruptcy, and nearly one in five council leaders predict their authority could go the same way this year.

“Across the sector, there’s a growing realisation that if businesses want their towns to work, if they want them to be clean, safe and attractive, they have to contribute,” says Turner. “Businesses are getting involved in this stuff in a much more intense agenda because life’s pretty grim out there, I’m afraid.”

However, there is also a growing opposition to the movement in some parts of the country, and a number of businesses are trying to overturn them or refusing to pay the levy.

In Stratford-on-Avon, a group of businesses are appealing to the levelling up secretary, Michael Gove, to reverse the renewal of the Bid there following a vote in February, arguing the ballot was not held correctly.

Meanwhile, a large number of businesses along the Yorkshire coast are gearing up to fight the renewal of England’s largest Bid, which encompasses 1,300 firms in the area. It was first introduced in 2018 following a vote with a turnout of 29%.

Of the 217 votes cast in favour, almost 70 were from Scarborough and East Riding councils, which collect the tax on behalf of the Bid, as their car parks and public toilets are classed as businesses. Hundreds of business owners refused to pay the levy, with many ending up in court, and by the end of 2021, 800 companies were in arrears.

My offence is refusing to give away my money to somebody I don’t know, so that they can do with it as they please

Harry Scott, hotelier

Local councils have agreed to abstain from voting in the Bid renewal ballot this year, which will also exempt retail businesses.

Harry Scott, owner of the Delmont Hotel in Scarborough, is due in court in June over a £5,000 Bid levy he is refusing to pay.

“I’ve never been in trouble in my life and now I’ve had to appear in court. My offence is refusing to give away my money to somebody I don’t know, so that they can do with it as they please,” he says. “The whole thing is about as transparent as a brick wall. In a so-called democratic society it’s disgraceful. I really don’t think it has done anything for us.”

A spokesperson for the Yorkshire Coast Bid said: “We have and continue to work closely with our members and are proud to say that it is with their ideas, funding and support that we have been able to fund over 156 events, raise over £100,000 for local charities, and match over £1.4m of our business funding, all to promote the Yorkshire coast as a destination for locals and visitors.

“With the knowledge of what has been delivered over the last five years, we hope that, similar to the hundreds of Bids around the UK, our ­members will choose to vote to keep our organisation in place to support them further.”

In Twickenham, south-west London, Matthew Hugill runs a tattoo shop within the Discover Twickenham Bid area, and recently avoided a liability order over an unpaid levy when the judge decided the local council could not provide evidence it had billed him correctly.

“I just paid it at first because I didn’t really understand what it was. But then I started questioning it and looking into it,” he says.

“The majority of businesses didn’t vote [to create it], which means they’re not interested in it – but we’re still all expected to pay. And a lot of towns that are doing really well don’t have Bids. They say they’re transparent and care what businesses think, but the minute I’ve spoke up it feels like they don’t want to listen.”

Kevin Jones, chair of the local Bid, says its renewal in 2023 with a 55% turnout showed “confidence in the concept of Bids and a result of us businesses having worked collectively for the common good of our town over recent years”.

The Department for Levelling Up, Housing and Communities said it was creating a “Bid innovation forum” with business and local government representatives to see how the model could be improved.

“The department is currently considering whether a review of the Bid arrangements should be undertaken,” a spokesperson said. “We recognise the important role Bids can play in improving the local trading environment and want every Bid to be transparent, accountable and focused on making their local area better for the people living, working and visiting it.”