The London Retail Consortium (LRC) welcomes the Parliamentary progress of the Crossrail Bill. As the leading representative of the capital's retail business community, we support the continued development of a sustainable and effective transport system for London in the 21st Century.
Retailers recognise the obvious benefits that the Crossrail’s objectives will bring, in introducing a brand new network of services, which will link areas across London that will reduce overcrowding on the London Underground and national rail services. In addition, we are strongly in favour of the added support it will provide for economic growth and regeneration in deprived parts of the Capital.
This would not just be London's biggest project; it would be the biggest project ever undertaken in the United Kingdom. However, we are concerned that the Crossrail Bill has proceeded to its Second Reading without any clear discussions about funding.
Crossrail will have major environmental and operational impacts on businesses in the Capital, and business will be called upon to fund part of the project.
The LRC is calling for an equitable funding option, as currently retailers are reluctant to offer unconditional support to a scheme that may include the option of levying a supplementary business rate, which it believes to be inappropriate for such a large-scale infrastructure project.
Whilst the project offers potential benefits to business in London, on the whole the substance of those benefits will not fall to retailers.
Controversies
The cost of the Crossrail project is largely seen by retailers as its most controversial aspect. The Transport Secretary has announced that the Crossrail project would not be funded entirely by the national taxpayer. Part of the costs of the project will be borne by those who will benefit most from the scheme, including the business community and property developments.
As with any major transport project, there are environmental concerns about the impact of a new railway through the centre of the city - both in terms of the natural and built environments. The short duration of consultations on the project have also been a source of criticism and a cause of concern for us.
Costs to retail
The LRC is aware of the desire that certain sectors of business have to ensure that the Government stands by its commitment to the construction of Crossrail. Some business organisations supported by a number of the Capital’s major businesses have been working hard to pre-empt any Government announcements on ‘alternative funding mechanisms’ that would outline an agreed amount that the business community would be willing to offer. The most popular idea put forward has been the proposal of a 1.5% - 3% levy on business rates in London.
Whilst this campaigning is laudable in maintaining the drive to ensure that the project does not falter like previous attempts, this ‘business approved funding option’ put forward in many meetings with officials unfortunately does not have the support of the second largest business sector in London – retail.
While retailers recognise that business should of course pay its fair share for infrastructure projects that may benefit them, we have a number of difficulties with a supplementary business rate funding option, including:
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We believe that any business contribution to a large-scale infrastructure project must be related as closely as possible to the benefit enjoyed by the businesses that are paying for it.
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Business rates form a substantially higher proportion of turnover for retailers than for most other businesses, yet there is no reason to believe that retailers will benefit substantially more from Crossrail than other businesses.
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We are concerned that businesses may have to pay for the project ‘up-front’, years before any benefits will be delivered.
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We would argue that at the very least, if the business rate were to be used, an approach should be considered which grades any charge to be levied by retailers accordingly to their proximity to the route of Crossrail.
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While Crossrail will at a macro-economic level assist the London economy as a whole, far greater benefits will accrue to the West End, the City and Docklands than to suburban areas to the north and south of the Capital.
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Property costs are a significant and growing liability to retail - especially small and multiple retailers. Any funding proposal which asks for the business cost burden to be shared equally, but does not deliver equal benefits, is highly flawed.
The LRC is currently undertaking work to quantify the cost impact to retailers in London of a supplementary business rate.
In the meantime, the LRC call upon the Treasury and Department for Transport to publish a full public consultation on proposed funding options to allow a fully informed and reasoned debate to take place, on a matter which could have a profound long term effect on business in London.
Retailers are keen to find a solution to the funding issues to ensure the rapid progress of the Bill to will allow construction to commence on this much needed transport project.
If you would like to discuss any of the issues in this paper please contact: James Tyrrell on 020 7854 8925 or james.tyrrell@brc.org.uk
