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Business Improvement Districts ‘in disarray’ over council charging plan

Business Improvement Districts ‘in disarray’ over council charging plan

🕔19.Feb 2016

A decision taken by Birmingham city council more than a decade ago to meet the administrative costs of Business Improvement Districts has returned to haunt the local authority.

In 2005, in an effort to encourage businesses in Broad Street and Brindleyplace to vote for setting up a BID, the council promised to pay for the collection of the annual tax levy to be imposed on local firms.

The carrot worked and Broad Street became the first of 11 BIDs, which today makes Birmingham the leading city in the country for Business Improvement Districts. The organisations have raised more than £20 million of additional private sector income that has been invested mainly in environmental improvements for the local area.

Having agreed to pay for Broad Street’s administrative costs, the council could hardly avoid making a similarly generous gesture for all of the other BIDs.

Eleven years later, the council is facing a serious financial crisis and will have to trim its budgets by £250 million over the next four years on top of more than £500 million cut since 2011.

The Working Neighbourhoods Fund, which was used to pay for BID costs, no longer exists and the council now relies on using cash from its policy contingency reserve.

In the circumstances it is perhaps unsurprising that the BIDs have been asked to make a contribution towards the council’s savings targets by meeting a proportion of administration costs for the first time.

It is proposed the BIDs pay the council three per cent of the income they receive from the levy placed on businesses. A five per cent charge was initially proposed, but reduced following adverse reaction from some of the BIDs.

The charge will not be imposed until 2017, with the Jewellery Quarter BID in line to be the first in the city to pay. Other BIDs will follow after they come to the end of their four-year terms and have balloted local businesses to secure a new period in office.

The plan to impose an administrative charge on BIDs prompted stormy exchanges at the economy scrutiny committee with chair Cllr Victoria Quinn publicly criticising deputy council leader Ian Ward and economy cabinet member Cllr Tahir Ali.

Quinn accused the pair of failing to produce evidence of ongoing strategic support for the BIDs, of refusing to meet BID chairs and of poor consultation. She was backed up by BID representatives in the room who spoke about the difficulty of securing service-level agreements and dealing with council lawyers “who think they know better than anyone else”.

Cllr Quinn said:

I remain incredibly concerned about the resources you are able to give to the BIDs moving forward.

She added that BID representatives had been “left in disarray” over the financial difficulties they would face in future.

Cllr Ward said pre-arranged “diary commitments” had prevented him from meeting city centre BID chairs, but he would endeavour to do so as soon as possible. He added that it was inevitable, given the council’s financial difficulties and a workforce that has halved in size since 2011, that the local authority could no longer meet the administrative costs of the BIDs. He said:

If the BIDs have genuine concerns, my door is always open and I am more than willing to listen..

Statutory regulations governing BIDs allow councils to impose a “reasonable charge” to cover administrative costs. Some local authorities in the country make a charge, while others do not.

Cllr Ward confirmed that a proposal to charge BIDs three per cent of their income would go to the March cabinet meeting.

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