Southwold: welcome to the town where business rates are set to rise 177%
When shop owners in the seaside town of Southwold warn of the “tragic” and “catastrophic” consequences of steep increases in business rates, it is tempting to assume that their campaigning zeal might be nudging them towards hyperbole. But fuelling this powerful, coordinated local protest is a real, widely-shared fear that a projected increase of 177% in business rates could ruin the town permanently.
There was only muted relief among shop owners on Wednesday in response to the announcement by Philip Hammond of some interim softening of proposed rates rises, which removed the immediate prospect of huge new bills from the small businesses along the high street. There was no celebration because the longer term threat to the survival of the town’s independent businesses has not been removed.
Southwold is well-known for its multi-coloured beach huts, lighthouse, pier and bowling greens; less so, until now, for its political activism. When the town realised that it was the place worst hit in the country by proposed business rate rises, shopkeepers launched a poster campaign forcing customers to confront the potential impact, if the increase was passed in full onto them. Most shop doors in the town carry a sign informing customers of the percentage rise they face in rates, and appealing for their help in petitioning parliament.
On the door of one of the town’s bakers, customers are told: “If we were to raise our prices by 177% a sausage roll would go from £2.95 to £8.17.” The owners of Chapmans, the newsagents – facing a 400% rise in rates, calculated they would have to sell newspapers at £8 a copy, if they were to recoup the increase. Customers were urged to write to their Conservative MP, Therese Coffey – who represents Suffolk Coastal. The campaign, and parallel protests in a handful of other towns around the country, appeared to have had something of an impact.
The vast majority of shops on Southwold high street were previously classified as small businesses but had been reclassified under the new regime that is due to begin in April, because business rates are calculated as a proportion of rental value, which has soared since the last valuation seven years ago. Hammond’s budget measures promised to stave off the looming crisis for Southwold – at least temporarily. But businesses were left feeling very fragile and concerned about the longer term rate rises.
Will Windell, town councillor and chair of the planning and development committee, said the budget had done nothing to tackle Southwold’s core problems. “In the summer when the roads are full of 4x4s, Southwold is seen as a rich town,” he said. “It is not at all rich.”
He added that at the turn of the century, two-thirds of the houses in Southwold were occupied by local residents; 17 years later, the balance has shifted so that now 57% of properties in the town are holiday lets or second homes.
“Property skyrocketed around 2010,” Windell said. “We have a very elderly population so when the houses get sold the prices are so high that young locals can’t buy them. 52% of Southwold are retired; the amount of people working full time is just 28%. The older people might be asset rich, but they don’t have much money.”
Southwold has one of the highest levels of children on free school meals in the region. In the past five years, several chain stores, from Costa Coffee to Jack Wills have opened on the high street, helping to push up retail rents. “A feeling of unfairness permeated the whole town. It has been hugely demoralising. The money that goes into the big brands goes straight out,” Windell said.
As a result of the town’s campaigning, Coffey met the chancellor in February to raise the issue on behalf of Southwold’s independent retailers; the intervention has had some impact but not enough to resolve the problem.
Southwold’s mayor Melanie Tucker said it was not clear how much the transitional measures would help. “It is welcome that there is some relief, but the devil is in the detail,” Tucker said. “We only know that it will help initially.”
Charlie Mills, who has been running the butchers Mills and Sons for the past three and a half years, says he does not expect to get any support when his rates rises from £7,000 to about £15,000. “It is unsustainable,” he says. “There is a risk that we will have to close unless we can find a magic way of generating an extra £8,000 of profit.”
In the past five years chains have arrived, and commercial property developers began demanding unheard of rents. “I don’t have much confidence in the council discretionary pot; that £300m pot has to go around the country,” he adds. “I don’t think the chancellor has given us anything to celebrate.”
There has been a butchers on the same site since 1684, but Mills thinks he may have to move to out of Southwold to somewhere cheaper.
Clare Hart, from Chapmans newsagents, said her shop, which has been operating on the site since 1897, also faced closure despite the chancellor’s transitional measures. Currently she pays £2,000 a year in business rates; over five years she will have to pay an extra £9,000, bringing the rates to £11,200.
“I calculated we would have to generate an extra £50,000 a year in sales to cover it,” says Hart. “We would like to think that we could keep it going but I don’t know how you would increase sales to that extent. If shops like us close it will be catastrophic for the town.”
Tracy Brown has run Crab Apple greengrocers for the past eight years. She says the rates for her shop were set to increase by 173% to £14,000. She was unimpressed by the measures announced by the chancellor. “We are a small shop selling low-value product; it is ludicrous that we are no longer considered a small business,” she says. “We would have to sell a lot more to cover it and the the margins on vegetables are very small.
“It is all the traditional shops – the butchers, the bakers, the greengrocers, the old-fashioned and small shops that can’t afford to stay. If they go, the town will just be chains – which would be sad for Southwold.”
Jane Patel has been co-owner of Queen Street Pharmacy for the past 33 years. Until now it has qualified as a small business but after the revaluation its annual rates of £4,600 are estimated to rise to around £14,600. She was relieved that the full impact would not be felt immediately but uncertain about the longer term future of the business. “We are going to try to keep going; luckily we own the building,” she says. “We have been here this long, we aren’t going to give up easily. We are a community asset; if we went there would be no pharmacy.”
Sarah Green, who runs Spots – which incorporates Southwold’s post office – said the new rates regime would have a devastating effect on the town, regardless of the interim measures.
“I think it really will be quite devastating,” she argues. “The town’s post office is very important for the community. We will see an 81% increase – not the highest in Southwold but it is the equivalent to a part-time salary or a £6,000 drop in income. There’s always been a post office on that site for at least 100 years. We don’t want be scaremongering, and start telling people that they are going to lose their local Post Office but I don’t know if it will be sustainable; my husband and I already work a six day and sometimes a seven day week.”
Craftco – a contemporary craft co-operative selling jewellery, pottery and prints where Julie Carpenter is one of 10 co-directors, was set to see its rates increase from £152 a year this year to around £5,600 after five years. This increase has been deferred, but the long-term future of the business is still under threat. “We will be put out of business; 80 crafts people will lose an important outlet for their work and livelihood,” she says. “All our customers say that one reason they come to Southwold is for the independent shops. If these rate rises go ahead the community aspects of the town will be devastated.”
Alison Boucher, who opened Cafe51 four years ago, said: “It is great news in that the government obviously realises that something is wrong with the system, but the higher payments have just been postponed.” In the longer term, however she was uncertain that the business will survive. The cafe is currently paying about £3,000 in business rates, and this will increase to £10,000 over the next five years.
“It will become a non-viable business,” she says. “It would eat into our profits considerably and we already do an 80-hour week. If the rise goes ahead we won’t be here in five years. It is really sad; I love running this place – it is a great business, and we have lots of local trade. I don’t think people are overstating the case to stay that it would be disastrous for Southwold.”