There has been a great deal of debate on this issue during the past week and it prompted me to go and have a look at the proposals in Nottingham before deciding whether to add my name to a petition to have the idea stopped in its tracks (if such a thing were possible!)
There is, as there always is in matters such as this, a great deal of emotive language being employed by the detractors and I wanted to see if they were right in their assertions. Such phrases as 'stealth tax on firms' have been bandied about. Immediately I knew something was up, because clearly a local authority who says in brightly coloured leaflets that "we are going to charge ever increasing amounts of money for those car parking spaces that you have at the back of your premises until it reaches a zenith in charge terms in 2015" is not doing anything that might be regarded as stealthy - it is up-front and quite in-your-face. So clearly the headlines were inaccurate, but then I'm not surprised since they so often are!
Looking at the facts, it becomes more apparent that here is a local authority who intends to make full use of legislation to bolster their income and, ostensibly at least, to enhance their green credentials. So are they wrong and who will this hit?
Without doing a formal study it would be impossible to come to absolute conclusions; indeed just reading the publicity material and the reaction from employers' organisations it would be impossible to gauge the actual impacts that may occur - what I predict however, is that whatever either side of the argument are saying there will be good and reasonable arguments for and against and there will certainly be unintended consequences that quite possibly someone in council circles has already realised but has not bothered mentioning in the blurb!
From the perspective of Nottingham City Council I can see no fault in having an ambition to reduce the congestion in the city, to make better use of the public transport system (PTS) into which they have so heavily invested with success, or to find new ways of legitimately raising ring-fenced funds for improving public transport still further. I would criticise them if they had not already established a good track record in PTS in the city and I would be extremely vocal if it transpired that the funds were not then ring-fenced but were used by a change in political leadership for subsidising general funds or other areas of the City's expenditure - but let's give the city council the benefit of the doubt at the start. So what about the vexed problems of exemptions, of establishing the number of spaces and the monitoring of the whole scheme?
These are areas in which I believe the city council is very brave to venture in - for a start I would want to know how they intend to deal with their own staff car parking? Is there a council that does not offer car parking space to a large number of staff who DO NOT need their cars for use on council business? There are literally hundreds of teachers who arrive at school each day and their cars sit on the former playground before being used to go home again in the evening - will the school budgets be hit by the WPL, and if so have the school managers and governors been warned to make provision in their budgets? There are also literally hundreds of non-eesential car users in civic offices - will the city council be charging itself for these spaces? Then there is the central government civil servants in Job Centres, Tax Offcies etc - will Westminster be paying the levy to Nottingham.
Itwill be interesting to see the exemptions applied - I note that NHS premises will be exempted, surely this cannot be right? I agree that a doctor on call, a visiting nurse or midwife, an ambulance or even an ambulance car driven by a volunteer should be exempted - quite right too, but there are dentists who do not use their cars except for commuting, the admin staff, should these be exempted, I can see no reason for it. So that will be a real hard one to tackle. What about undertakers - they have a real problem too, will the hearses and limousines be exempted, or at least their parking spaces? If not, what happens when the staff use the spaces when the hearse is not present? It says in the NCC leaflet to businesses that the emergency services will be exempted - again I'd ask why?
There is a small Police station near me where a fair number of support staff, permanently based on the premises arrive in their cars and park throughout their shifts - why should the spaces that they occupy be exempt, indeed in most areas officers can travel free on public transport and in consequence help with the policing of those very services, so they would have no need for the spaces anyway. I can understand exempting spaces for marked vehicles, and for those being used by plain clothes officers during their working day - but for the so-called 'civilian' staff who man the front desk or carry out other functions (with the possible exception of those whose shifts are in the middle of the night , but then that would apply equally to plumbers, printers, underground train drivers etc) - surely the space that they occupy needs to be charged.
It will be interesting to seek information under the Freedom of Information Act when this scheme has been up and running for a while to see how much the Council does collect from governmental departments, whether local or national. Just as it will be interesting to see how the council intend to accurately establish how many parking spaces are to be levied. Surely those spaces outside the Managing Directors' office are for the customers? Those cars belong to shoppers - they'll be somewhere arounds town! Is this where the council has to employ more investigators and CCTV cameras to spy on the business population to see whether they are cheating?
Any self-respecting business is going to blank out the car parking bays and leave it to chance - so how is the city council going to deal with that?
Oh yes, this is a story to watch; it is essentially a perfectly laudable idea - but then so was the originally envisaged Poll Tax and we all know what happened then!
Sunday 12 July 2009
Tuesday 7 July 2009
Upward only?
The Irish Government has announced that it will be banning upward only rent reviews from next month. An unusual and, frankly, brave decision by a government whose country which has an economy that has been all about massive, unprecedented, growth for a lengthy period and which has now stalled. Certainly from this side of the Irish Sea it will be interesting to watch what happens in the Republic.
As for the UK and its upward only rent debate, what will happen next is that the retail sector will bring out the big guns again to argue the case that in these economic times there has to be a modicum of give and take in any contractual relationship, especially where this impacts upon the bottom line of businesses who are otherwise struggling for trade for reasons beyond their control. In response to this the property sector will engage with counter-arguments that these contracts are set down for relatively long periods and the charges set out are fixed for that period - "how would retailers feel if they had to set prices for five years not knowing what will happen in that period to their own costs?"
This last argument seems to have been taken as the stronger by British governments who are less courageous, perhaps, than their Irish counterparts because the Westminster government has seen fit not to outlaw this archaic practice and in consequence the SME retailers has borne the brunt of yet still further increases whilst their most major competitors who operate in the rented sector are often in a far stronger position to exercise negotiating power. The fact that very often, even these chains are unable to negotiate confirms the inappropriateness and ineffectiveness of the system in a so-called market economy.
So, do the property owners and agents have a point? I believe that they do! In just one very specific area, they have a point. I believe that if you are creating a product, or are the first line of marketing of a newly created product then you are likely to adding something to the economy by the process of creating. In the case where a new building is created then this would, to my mind, qualify for being able to recover the costs and achieve an equitable profit as with any new product. Rarely in these cases is there any significant research and development costs (I do not see land searches as R&D!) so the profits that would be fair and equitable should be in line with established products from any manufacturer - albeit the period over which this profit might be attained could be over a longer life cycle than say a loaf of bread.
Fair enough then, the builder, the developer and the owner all look to make a profit over the design and build. From that point on though, the profit is made from the recycling of an existing product - second hand indeed! In what other market do second hand goods gain, unquestioningly, a guaranteed increase in returns year after year with the power of the law to protect that interest? It beggars belief that the Thatcher and Major Governments did not see off this idea - is it not the very type of regulation that the neo-liberal economic theorists abhor? Perhaps the influence of vested interests prevailed, who knows? But it is very odd!
Landlords might argue that they invest and re-invest in their properties and this needs to be reflected in the costs. Of course it must, but that surely is the basis of negotiation, these factors are all taken into consideration and if the parties involved cannot agree then arbitration should be sought. What should not be allowed is for notional repairs and upgrades, or even real upgrades whose values are grossly exagerrated, to be used as justification for raising rents without evidence of the facts.
You have only to walk down any British High Street to see that there is a real malady. The prime shopping areas have achieved serious rentals (which then directly affects the valuations for business rates) that never go down under this strange system - this in turn prevents new or newer businesses from setting up in that area meaning that the local economy is forced to rely on major national and international organisations to occupy these spots. Nothing intrinsicly wrong with them being there, but they do not, indeed cannot, be as significantly beneficial to the local economy as locally owned businesses. When the bigger chains catch a cold elsewhere, they pull out of the local prime area leaving a hole that it is incredbly difficult to fill. This hits the local economy with a triple whammy - loss of local jobs (the large organisation will usually have employed local staff), loss of the continuity and visual amenity in the key shopping street (very often a factor that reduces footfall with the attendant knock-on effects on remaining businesses), and still no opportunity for new local businesses to get a foothold.
As for the UK and its upward only rent debate, what will happen next is that the retail sector will bring out the big guns again to argue the case that in these economic times there has to be a modicum of give and take in any contractual relationship, especially where this impacts upon the bottom line of businesses who are otherwise struggling for trade for reasons beyond their control. In response to this the property sector will engage with counter-arguments that these contracts are set down for relatively long periods and the charges set out are fixed for that period - "how would retailers feel if they had to set prices for five years not knowing what will happen in that period to their own costs?"
This last argument seems to have been taken as the stronger by British governments who are less courageous, perhaps, than their Irish counterparts because the Westminster government has seen fit not to outlaw this archaic practice and in consequence the SME retailers has borne the brunt of yet still further increases whilst their most major competitors who operate in the rented sector are often in a far stronger position to exercise negotiating power. The fact that very often, even these chains are unable to negotiate confirms the inappropriateness and ineffectiveness of the system in a so-called market economy.
So, do the property owners and agents have a point? I believe that they do! In just one very specific area, they have a point. I believe that if you are creating a product, or are the first line of marketing of a newly created product then you are likely to adding something to the economy by the process of creating. In the case where a new building is created then this would, to my mind, qualify for being able to recover the costs and achieve an equitable profit as with any new product. Rarely in these cases is there any significant research and development costs (I do not see land searches as R&D!) so the profits that would be fair and equitable should be in line with established products from any manufacturer - albeit the period over which this profit might be attained could be over a longer life cycle than say a loaf of bread.
Fair enough then, the builder, the developer and the owner all look to make a profit over the design and build. From that point on though, the profit is made from the recycling of an existing product - second hand indeed! In what other market do second hand goods gain, unquestioningly, a guaranteed increase in returns year after year with the power of the law to protect that interest? It beggars belief that the Thatcher and Major Governments did not see off this idea - is it not the very type of regulation that the neo-liberal economic theorists abhor? Perhaps the influence of vested interests prevailed, who knows? But it is very odd!
Landlords might argue that they invest and re-invest in their properties and this needs to be reflected in the costs. Of course it must, but that surely is the basis of negotiation, these factors are all taken into consideration and if the parties involved cannot agree then arbitration should be sought. What should not be allowed is for notional repairs and upgrades, or even real upgrades whose values are grossly exagerrated, to be used as justification for raising rents without evidence of the facts.
You have only to walk down any British High Street to see that there is a real malady. The prime shopping areas have achieved serious rentals (which then directly affects the valuations for business rates) that never go down under this strange system - this in turn prevents new or newer businesses from setting up in that area meaning that the local economy is forced to rely on major national and international organisations to occupy these spots. Nothing intrinsicly wrong with them being there, but they do not, indeed cannot, be as significantly beneficial to the local economy as locally owned businesses. When the bigger chains catch a cold elsewhere, they pull out of the local prime area leaving a hole that it is incredbly difficult to fill. This hits the local economy with a triple whammy - loss of local jobs (the large organisation will usually have employed local staff), loss of the continuity and visual amenity in the key shopping street (very often a factor that reduces footfall with the attendant knock-on effects on remaining businesses), and still no opportunity for new local businesses to get a foothold.
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