Business improvement districts: Bidding for change

By Jo Bruce

- Last updated on GMT

Business improvement districts: A BID scheme may seem like an extra levy you don't need but there are plenty of benefits that make it well worthwhile.
Business improvement districts: A BID scheme may seem like an extra levy you don't need but there are plenty of benefits that make it well worthwhile.
A business improvement district represents more than just another bill from your local authority. It offers greater opportunities and support for the licensed trade sector as well as the chance to have more influence over how money is spent locally.

If your pub isn’t currently located in a business improvement district (BID), the chances are that one could be coming to a town or city near you soon. The National BID survey 2017 shows that, since 2012, an average 25 BIDs have been established each year, with 50 new or renewal ballots also taking place annually.

There are now 300 BIDs in the UK, which are defined areas created through a ballot process to deliver additional services to support local businesses. The majority of these zones are in town or city centres and are designed to support businesses to make their local areas more attractive as leisure, shopping and tourist destinations. 

Within each BID area, a levy is charged on all business ratepayers in addition to their normal business rates bill. There is no limit to the projects or services that can be provided, but they have to be in addition to services provided by local authorities.

Ballots on BIDs

Typically, BIDs charge a levy rate of between 1% and 4% of a business’s rateable value. Industry criteria states that up to 1% is the expected norm but, although a survey last year revealed that 27% operate at that level, a 1.5% rate is increasingly used (28% in August 2017). A number of BIDs (13.4%) also charge using a banded levy system. 

Licensees whose businesses are in proposed BID areas would be aware of this before a ballot is held because it is a requirement that proposals to local authorities set out the services to be provided, the size and scope of the plans and who is liable for the levy. Businesses that are subject to the proposed levy can vote in a ballot (managed by the local authority), which determines whether the scheme goes ahead. Once a BID is in place, a levy is charged on all businesses within the district (regardless of if or how each business voted in the ballot). 

Each zone is managed by a Business Improvement District Body, most often a not-for-profit private company, which sets out how it will operate. But it is the local authority that manages the billing and collection of the levy.

Dave Owens, manager of Wakefield Beer Exchange and former chair of Wakefield BID, urges licensees not to perceive a levy as just another tax. “This was one of the biggest problems we had when the BID first came in,” he said. “But once you explain to them the reason for spending the money and that they influence what it is spent on then they get it. Licensees need to not just support their BID but get involved so they have their say on what the money is spent on.”

He adds: “The Wakefield BID has impacted so much change and also stopped the council spending money on things we didn’t agree with. You can have a big influence.”

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Pub operators can significantly benefit from BIDs and the exciting developments and increased focus on their trading areas they can generate.

They can help create new events and initiatives to bring more people into city and town centres by marketing areas more effectively. They can act as a single voice for the businesses involved to raise collective issues with local authorities and can provide extra resources to help keep the streets safer and cleaner. For example, Liverpool BID Company has become the first in the UK to fund its own police officers dedicated to working in its district. BIDs can also help attract other external investment as a result of their activities.

The collaboration between different areas of the business community is an-other key benefit, according to Wakefield BID manager Elizabeth Murphy. She says: “We are able to bring together people in different sectors to work on projects or help each other with contacts which has proved really powerful.”

National BID Survey 2017 research also shows that of 178 BIDs, only 2.8% are also subject to a late-night levy (LNL), with BIDs largely now seen as satisfying all the needs LNLs were designed to tackle. 

BID initiatives have helped to manage and improve the night-time economy in many areas such as the one in Wakefield, which works with organisations such as Drinkaware to provide support crews in late-night venues. It is also delivering ‘Ask Angela’ training to help those who feel vulnerable in pubs and clubs, while a new ‘Wakefield Social’ association and app to drive awareness of the premium drinking options on offer in the city’s venues is due to be launched and hospitality awards are to follow next year.

Billy Muirhead, managing director of nine-site operator Unity Bars & Clubs, which has three sites in Wakefield says: “The Wakefield BID has had a positive impact on the city centre and our businesses – there is no doubt about it. BIDs have helped areas in the north of England affected by the recession to move forward positively and change perceptions of a number of cities and towns.”

Some BIDs, such as Mansfield and Cheltenham, have also helped their areas achieve Purple Flag standard accreditation, launched in 2012 by the Association of Town and City Management. This
enables members of the public to quickly identify town and city centres that offer an entertaining, diverse, safe and enjoyable night out.

Being part of a BID also gives the business community a more powerful voice. Owens says: “As a single business, it is hard to be heard but as a collective shouting the same thing, the local authorities have to take you seriously.”

While BIDs are generally used to improve the trading environment for pub operators, they do have their critics, including licensees located in more peripheral areas of a district, who sometimes feel they get less benefit and value from their levy payments than those in city hubs where the bulk of initiatives are typically focused.

BIDs have been accused of being, by their nature, undemocratic, facing criticism of concentrating power in a geographic area into the hands of a few.

According to the National BID survey, three BIDs failed in the past 12 months, two at renewal and one in its first term. The survey also reports that “anecdotally, this year has again seen an increased number of challenged BIDs”. There is also criticism that some areas’ levy rates are calculated on old rateable value lists – around 30% last year, according to the BID survey.

But despite some imperfections, supporters maintain that, in the majority of areas, BIDS are helping provide vital business and marketing boosts to pubs and bars. Stephen Patterson, director of communications at Newcastle NE1, which recently launched its BID proposal for a third term, says the licensees who benefit most are those who are active and engaged in the process.

He says: “Licensees need to help drive the agenda. From our experience in Newcastle, if a BID is suggested for your area, get involved and work with the proposers to help create a business plan that can make a big difference to your business and sector. It will be worth it.”

Around 30% of the NE1 BID is made up of licensed premises. Among key initiatives that have helped the sector, are an ‘Alive after Five’ scheme that has transformed Newcastle’s early evening economy with most city centre shops open until 8pm. It is claimed it has delivered an estimated £839m spend after 5pm, with an additional 13.7m visitors spending money after 5pm in the city centre.

NE1 also runs two Newcastle Restaurant Weeks a year – in January and August – that have helped to bring new people into the town and raise the profile of the city’s food offer.

Andrew Shiel-Redfern, general manager of New World Trading Company’s Botanist in Newcastle, says: “The NE1 BID is well balanced between all the different business groups’ interests. ‘Alive after Five’ has been great and the BID puts on world-class events that bring new people into the city and boost trade. A recent Ed Sheeran concert at St James’ Park delivered us a 90% uplift on the same day last year.” He adds: “The levy we pay is very reasonable in terms of the events and the support that you get.”

Wakefield’s Owens says: “The BID has been great for business from a marketing and financial point of view. But it takes time to see the benefits. For us, in year two, you could see the benefits and, in year three, things really got rolling.”

From LNL to BID: Cheltenham’s story

In Cheltenham, a late-night levy (LNL) introduced by the council in 2014 was scrapped and replaced by a business improvement district (BID) in August 2016. Neighbouring Gloucester also voted in a BID last summer instead of a LNL. 

The decision to scrap the LNL in Cheltenham in favour of a BID was the first of its kind. Around 560 businesses in Cheltenham come under the BID, including 42 licensed premises and dozens of others that are predominantly restaurants rather than bars.

Cheltenham BID director Kevan Blackadder says: “The overall income generated by the BID is significantly larger than that generated by the LNL. For the town-centre licensed businesses making BID levy payments, the activity is concentrated on their location rather than spread across the whole borough and they have a direct say on how the money is spent.”

In general, Blackadder says that the overall amount pub and bar operators are paying compared to the LNL is slightly less.

“Based on the contributions they are making compared to the activities being carried out on their behalf, our licensed businesses are seeing a far greater return,” he maintains.

A survey undertaken by Cheltenham BID, following its second Cheltenham Cocktail Week in May, asked licensed premises operators how they rated the work the BID was doing generally for them, with 25% rating it excellent, 50% good and 25% average. Among key initiatives that have had an impact since the BID launch are Cheltenham Cocktail Week; Light Up Cheltenham in February, where key buildings are lit up at night to draw customers; support for successful Purple Flag accreditation and renewal; promotion of Cheltenham Beer Week; and the launch of Marketing Cheltenham.

Other schemes that have benefited licensed outlets are: improved Christmas lights; the launch of a Cheltenham Gift Card to encourage people to spend locally; a group purchasing scheme to cut bills; lobbying of councils on behalf of businesses that helped lead to resurfacing the high street; social media training, which saw Cheltenham rise to sixth place in the UK Digital Influence Index; BID Awards to celebrate best businesses and their staff; reduced parking costs at key times; and Cheltenham Races Week.

Blackadder says: “I would definitely recommend adopting a BID in other areas that have a significant number of late-night operators.” Cheltenham Borough Council director of planning Tracey Crews says: “For an organisation that is still in its infancy, it is clearly making a positive impact.”

Jimmy Elias, chairman of Cheltenham Nightsafe and operations director for Fever Bars, adds: “The Cheltenham BID has done loads to bring more people into the town.
There has been big investment in marketing Cheltenham and it has helped the night and daytime economies in Cheltenham work more hand in hand. I am a big supporter of the BID.”

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