“Let the devolution revolution begin!” said the chancellor as he finished his Conservative conference speech on Monday. An appropriate flourish following the radical reform of business rates – and Manchester couldn’t be a better setting for the announcement.
This latest step is yet another reminder of the huge opportunity awaiting this city’s ambitious entrepreneurial community. I just hope everyone, or more specifically the Greater Manchester mayor, is prepared to step up and take it to the next level.
Come 2017 it will be all eyes on Manchester as the victorious mayoral candidate is sworn in. Whoever occupies the office will be championing not just Manchester but devolution itself, and I firmly believe that our growing business community provides the biggest opportunity for the new mayor to make their mark.
A record 13,000 new businesses were created in Manchester last year, and from my recent experiences in the city I fully expect that number to rise this year. For a city less than half the size of Birmingham, that’s no mean feat, and Manchester’s current leadership should take the credit. They’ve carefully worked with developers to keep office rents sustainable and steadied Manchester’s economy while other cities’ crumbled. Any mayor would have to continue this great work, banging the drum for their city as a business hotspot, but a Manchester mayor needs to go further than that.
A growing community of entrepreneurs and small businesses will feed innovation, provide jobs, breed creativity and inspire the next generation of business leaders. The mayor’s office needs to unfurl the welcome mat for small businesses, and business rates are one of their greatest opportunities.
Make no mistake, allowing mayors the option to raise business rates is a risky move. Local authorities will have to tread lightly and control the urge to cash in early by adding a premium to rate levels. Yes, the money tap would flow freely, but how long would it take to run dry? It certainly wouldn’t encourage SMEs and fledgling entrepreneurs to flock to the area. In fact it could persuade those already here to leave.
Going down this route would leave you with a market dominated by big businesses which can afford to take the hit. You’d still collect rates, but Manchester would have lost its innovation and its identity.
Manchester’s prospective mayor should see this as an opportunity to reassess rates entirely. Do away with the traditional rates system based simply on historic property value, and instead focus on the growth of the tenant’s business. Use this new freedom to offer lower rates for new enterprise and introduce higher rates once these businesses have reached a higher performance benchmark.
I have seen first hand the huge stress that business rates puts on growing businesses. By taking a measured, sensible view, Manchester’s incoming mayor can bind the SME community to the city for the foreseeable future. They can attract the most innovative, up-and-coming entrepreneurs from across Britain and around the world. And they’ll ensure that Manchester will reap the rewards of this growth with greater employment and innovation.
A progressive, long-term approach to SMEs will give Manchester a significant competitive advantage over London and other major UK cities. So go on Manchester, show us how it can be done.
James Layfield is the CEO of Central Working, a network of five business clubs across London and Manchester
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