How difficult is it to business in 2013?

I was trying desperately to avoid being negative on my blog. You’ll notice I have been quieter than usual – I am really busy at work at the moment. This probably bodes well for the property market – yes there is a bit of life in it…


And this particular post isn’t about trying to run a business in Nottingham at the moment. In case you don’t live here – it is an utter nightmare. My advice – stay away. It pains me to say this – but getting around this fair city is nothing short of a living nightmare! I can add probably 30 minutes to my day to get to and from my office – due to the Tram works. Telling me the long term gain will be worth it is likely to induce a fit of rage.

No, this post is about pensions. This Government – and previous ones have so messed up the systems that business is now having to pick up the pension mess. At my board meeting this week we were told that we need to start a process of registering staff on the new ‘NEST‘ scheme. The cost to set up – £15,000 and 1% of our ‘salary bill’ this year – next year it’s 2% then 3% the following year. In the first three years this will amount to c. £70,000.

Ignoring the ridiculous amount of red tape – think about the money – over a three year period this could be two jobs?

We pay a high rate of tax, National Insurance, VAT and all manner of other hidden taxes. The Government collect it all – make a mess of it and then expect (require) us to sort it out.

Still – you need to read about our MP’s pension arrangements to see just how this works – there’s a great article here.


The decline of education?

There is something amusing (read ‘worrying’) about the man who runs our schools. Michael Gove is that man. He’s the bloke in the picture.


He seems to have a bit of an issue with statistics though. He certainly has an obsession with them.

His stated aim is that he wants, “every school to be as good as the best“. This is lofty and ambitious stuff. Of course there is a bit of an issue with this – schools are placed in league tables. By definition these tables rank all the schools except the first as not “being as good as the best”. So they can’t all be as good as the best. It doesn’t work like that.

Then there is his desire that all Schools should be “above average“. Herein lies a further problem – this is a mathematically impossibility. A bit like the fact that 49.99% of the population are below average intelligence.

At least we know where he does his research – someone did a Freedom Of Information Request to establish where he got the notion that “British teenagers were ignorant about key historical dates“. You might have imagined that this was some exam board feedback – but alas no – it was that PR surveys by Premier Inn and UKTV Gold were the source of his “evidence”.

Worryingly this man has a teflon coat having been at the start of Camerons Government from the beginning…

Coffee drinkers – a rebellious lot!

I take my coffee now from Costa – I turned my back on Starbucks 18 months ago when Costa opened their first drive through on my way to work!

Starbucks - Shanghai branch!

Starbucks – Shanghai branch!

In recent weeks it has emerged that Costa has seen a sales increase of 7% in the last twelve months. You can’t help but wonder if there is something of a backlash against Starbucks. Of course it is now well documented that since 1998 they may have sold £3bn worth of coffee but they only paid £7m in tax.

There are two amusing parts to the Starbucks story.

Firstly – they have not actually broken the law. The Government feigning indignation is simply to get The Sun readers on side. It’s Outrageous (but not illegal) yelped the headlines?

The second is that Starbucks then made it’s real faux pas – offering a sort of token payment to HMRC – £10m this year and the same next. No doubt they see this as a bit of an inconvenience. I would love to make an offer to the Taxman of what I fancy paying (oddly it is less than I pay now!).

Starbucks timed the issue of their new staff contracts a little badly. Two weeks ago they told all of their staff they were introducing new contracts – reducing paid lunch-breaks, removing sick-pay on the first day of illness coupled with a reduction in maternity benefits. I guess they need to get the cash from somewhere to pay this ‘optional’ tax!

If the figures are anything to go by – it looks like this has been a PR disaster for Starbucks?

Empty Houses – Landlords face another kick in the teeth

There are evidently around 700,000 homes empty in the UK at the moment. This represents just over 3% of the total housing stock. But the real figure of concern is that over quarter of a million homes are long-term empty (classified as being over two years vacant). It is estimated that Nottingham has over 4,000 vacant homes – with perhaps 1,000 long term empty.


Clearly this is a real concern – on two counts. Firstly that we have homeless people and secondly that we have more-or-less stopped building new homes since the property crash in 2008. Annual housing completion in the year to September 2012 according to the Government was 117,000 – 6% up on 2011.

The Future Homes Commission believe that we need 300,000 new homes each year.

The maths don’t add up. But clearly could be helped if we can shift some of the vacant stock.

In the last couple of days some Councils have instigated Government changes which means the removal of the 50% relief for second homes (fair enough) but also that vacant houses will attract Council Tax from the day they are vacated. Furthermore a premium of 50% can be applied to those houses in the long term vacant category.

I have no issue with the latter proposal – it might encourage those long-term vacant stock to get them into the market. Generally speaking these houses can be a blight. But I don’t agree with the paying rates on day one of vacancy. The usual Government drivel was trotted out – “It will encourage owners not to have property vacant for any length of time’.

But what about those properties that need work – or those that are not easy to let – either in a location which has challenges or perhaps at a time of year when the market is flat (now?). As seems par for the course – this Government stumble into policy after policy without thinking through the consequences for the man in the street?

The sneaky Rates trap

Last week the Government announced that it wouldn’t carry out a Rating re-valuation in 2015 – pushing the date back for two years. Many of my peer group started when the 1973 list had been in place for years – eventually a major revaluation was undertaken in 1990 – since that time there has been a new Rating List every five years.

The last list – effective from April 2010 is based on valuations 2 years previously – i.e. in April 2008. And, in case you have been in a cave. that was pre the property crash. In other words the values are taken at the peak of the market!

And rather than have a re-basing of values – the Government have chosen to leave these sky-high values in place for another two years. The thinking behind the 5 year revaluation was to make the Rating List more reflective of the ‘current’ values.

The Government statement suggests, “we want to prevent unexpected hikes in business rates on local firms over the next five years. Tax stability is vital as business rates are the third biggest outgoing for firms

The property industry are up in arms about this.

It is nonsense to suggest that this helps business. What actually happens after the revaluation is that the Government adjust the Rate poundage – so that the net effect on their income doesn’t change. So if the total Rateable Value of all properties drops by 10% they simply increase the Rate poundage by 10%.

The lack of valuation helps London but not the provinces. On Bond Street values in the last 5 years have increased by around 50%. I don’t think that this is the case in Nottingham! We have probably seen values drop.

So the provinces are hugely disadvantaged.

And the Government suggesting Tax Stability helps us is just an insult. It’s no comfort if we are paying too much money to start with.


The economics of it all….

In the week I was sent this rather brilliant essay. I am not sure who wrote it, but I think it is brilliant!

An economics teacher at a local school made a statement that he had never failed a single student before, but had recently failed an entire class. That class had insisted that Gillard/Brown socialism worked and that no one would be poor and no one would be rich, a great equalizer.

The teacher then said, “OK, we will have an experiment in this class on the Gillard/Brown plan”. All grades will be averaged and everyone will receive the same grade so no one will fail and no one will receive an A…. (substituting grades for dollars – something closer to home and more readily understood by all).

After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little.

The second test average was a D! No one was happy.

When the 3rd test rolled around, the average was an F.

As the tests proceeded, the scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.

To their great surprise, ALL FAILED and the teacher told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great, but when government takes all the reward away, and gives to those who do nothing, no-one will tryor want to succeed.

These are possibly the 5 best sentences you’ll ever read and all applicable to this experiment:

1. You can not legislate the poor into prosperity by legislating the wealthy out of prosperity.

2. What one person receives without working for, another person must work for without receiving.

3. The government cannot give to anybody anything that the government does not first take from somebody else.

4. You cannot multiply wealth by dividing it!

5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what theywork for, that is the beginning of the end of any nation.

Charity shops – illegal?

You might have started to notice a proliferation of Charity Shops on our High Streets. It isn’t, in my view a good sign. Our measure of aspirational shopping – which leads to a feel-good factor doesn’t normally include Oxfam and the like. I have nothing against these shops – they do serve a purpose – but there is a point at which they can destroy a street-scene.

One of the reasons we have seen the growth is not necessarily them selling ‘cheap’ goods – although that does have a part to play in the current economic climate. There is another reason – landlords are pay full business rates on empty commercial properties, but charities using commercial property for charitable purposes qualify for an 80% automatic discount on business rates – plus a discretionary further discount of 20%.

This clearly can be a good deal for the landlord – and likewise for the Charity tenant. Despite the Governments contention that the removal of empty rate relief encourages landlords not to leave premises vacant we all know that this is rubbish. My landlord clients don’t wait for a rising market – they do deals with people who come along.

But something interesting has now happened. The Charity Commission is investigating over 700 deals between charities and landlords where concerns have been raised by local authorities that the properties appear to be unoccupied and that the arrangements may constitute business rates avoidance. This is because we have seen a new phenomena. This is where the Charity make an approach and offer to ‘take’ the premises with some form of sharing – i.e. the landlord pays the Charity (because anything less than the Rates bill is a saving!). They don’t occupy they simply pocket the cash.

The Charity Commission are now saying that they will look closely at these ‘arrangements’ and the Charities might fall foul of the law.

The angle taken is to see that Charities are not being taken advantage of by business…

This I find rather amusing – my dealings with Charities suggest that some (not all) of them know precisely the position they occupy and use it to further their interests. Fair? – I’m not sure. But this little loophole might now get closed – and with it comes more misery for landlords and more vacant shops on the High Street.

By Tim Garratt Posted in Nottingham Tagged Barnado's, Charity shop, Empty Rate Relief, , High Street, Oxfam, Rates, Rates liability, , shops

2011 – a miserable year for property…

I guess we knew what the headlines were going to be – and they haven’t disappointed…even if they are disappointing!

One trillion pounds - piled up next to an arctic....

In the commercial market in 2011 the value of UK commercial property investment transactions in Q4 2011 was £8.69 billion, down 25% on the same period for 2010. We were hit hard by the lack of liquidity in the market and by the Euro-Crisis.

UK house sales fell last year to 869,000, one of the lowest totals on record, HM Revenue & Customs has said. House price growth was just 1% – which in the circumstances was probably fairly good!

This seems to have been a long depression – the back end of 2008 was when we saw the writing on the wall – that is nearly 3.5 years ago. I don’t think we ever anticipated the market to flat-line for so long.

This week the UK reached £1tn (£1,000,000,000,000) in debt. To understand what one trillion looks like – go and have a look at your doormat – 1 Trillion of them would cover the whole of England, Scotland, Wales and Northern Ireland. Alternatively if you had spent £1m every day since Jesus was born, you would still have some change!

The really worrying thing is that there is little sign of a change in the short term. However, in the medium term I am involved in a number of major projects which could come to fruition in 2013-15. They have a long lead in, but I take some comfort in the fact that people are considering them. Of course this Parliament must be dissolved by May 2015, it is unlikely that the current incumbents will want to go to the Country with the current state of play.

Further I suspect that there will be some monies available starting next year. We will have the Olympics out of the way – I doubt we will ever know how much that has cost us. The budget of £9.3bn is apparently robust, money we can ill afford in the current economic climate!

Perhaps it is better in the middle distance than we think? I hope so!

Another knee jerk policy : the feed in tariff cut was illegal

You might have spotted this story just before the Christmas break. Friends of the Earth and two solar firms, Solarcentury and HomeSun took the Government to court over the decision to slash the Feed in Tariff from 43.3p to just 21p per kilowatt hour. The favourable rate was introduced in 2010 as a deliberately attractive rate to encourage the fitting of panels.

A whole industry sprang up. Thousands signed up and this technology has the prospect of making real inroads to our CO2 emissions. Self generation (and selling surplus power back the grid) are clearly very green. Your south facing roof could save CO2 and potentially make you money.

But no sooner had the movement started than the Government slash the rate of the feed in tariff. Not by a few percentage points, but by half. The announcement was made in the middle of the consultation period! Mr Justice Mitting in the High Court found the Governments decision to slash feed-in tariffs (FiT) several months early, before a consultation on the issue ended, was “legally flawed”. There is likely to be a Judicial Review in the New year.

Of course a number of people paid premium prices to get panels fitted before the cut off date – which now looks like a waste of money. But more fundamentally, this whole debacle has put some people off the fitting of the panels.

Like most things, we don’t like uncertainty. The smart money is that this is a set-back. the Government have had their knuckles rapped. But they will almost certainly reduce the rate – they’ll just have to it a bit smarter next time!

Nas the clue is in the official Government response – Greg Barker the Climate Change Minister said the government disagreed with the court’s decision and would seek an appeal.

Perhaps the Government are not quite as Green as they suggest?

UPDATE 4 January

Climate change minister Greg Barker has today said, “We disagree with the court’s decision,” adding, “We will be seeking an appeal and hope to secure a hearing as soon as possible. Regardless of the outcome, the current high tariffs for solar PV are not sustainable and changes need to be made in order to protect the budget, which is funded by consumers through their energy bills.”


I seem to be coming back to our Planning system a lot at the moment – I blogged about the proposed changes a couple of weeks ago. I have taken a bit of heat for some comments I made to the Estates Gazette about Nottingham‘s old Planning regime.

Not the sort of Green Belt I had in mind, but you get the picture?

The point I was making was that a few years ago, the Nottingham Planners hadn’t covered themselves in Glory. I thought that they were unresponsive and had caused the City some bad press with developers who went elsewhere. Elsewhere to towns which gave them an easier ride.

Actually my comments were aimed at a Planning system in general – as well as the one in this fair City. It has become a complex matter to get a Consent on anything significant. Some say – so it should. But I see some of the process – which can be over-burdensome, slow and extremely frustrating.

It was interesting to read at the weekend that the Government are now slowing down the possible changes to the system – it looks like they will get delayed by around 18 months. I guess those of us who are used to the system won’t be surprised. The lobbying has been powerful against the streamlining of the system.

We do need Planning controls – they are important. I am a huge fan of the green belt. I think in some cases we could extend it – which would force urban renewal. But sometimes the controls become politicised and that is when we fall into difficulty. No one is going to oppose buildings which create jobs, but sometimes the places which used to house those jobs are no longer fit for purpose. A change of use is needed. And on this occasions what we need is a Planning system which responds quickly to our chaining circumstances – before end up with white elephants for buildings…