Council funds work to explore whether island businesses would support the creation of a Business Improvement District on the Isles of Scilly

You may have seen social media posts from the Islands' Partnership (IP) recently asking the local business community to complete a survey about Business Improvement Districts. This important survey asks whether business owners would support the creation of a Business Improvement District (BID) on the islands, as an alternative to the current IP model, and can be completed on the Islands' Partnership website.

The launch of this survey follows the meeting of Full Council on 30 May 2023, at which Councillors agreed to allocate £27,625 from the Council’s contingency fund for the work required to produce a business case for the creation of a Business Improvement District for the Isles of Scilly.

A Business Improvement District is a defined area in which a levy is charged to all business rate payers in addition to business rates. This levy is used to develop projects which aim to benefit businesses in the local area. The businesses required to pay the levy are consulted on how such projects or services should be prioritised by a body established to run the BID.

There is no limit on which projects or services can be provided through a BID. The only requirement is that it must be additional to services already provided by the local authority. The majority of BIDs use Baseline Agreements to set out existing levels of service provision delivered by the local authority and other public agencies. This enables the BID to demonstrate how it will add to these over the agreed term.

The maximum period that a BID can operate for is 5 years, but they can be re-established for further 5-year terms following the approval of new business proposals and a successful ballot.

The recommendation to fund the development of a fully costed business case and options paper for a BID on the islands followed discussions between the Council and the IP which explored how the voice of the wider business community could be strengthened on the islands, but also amplified across the water. It was suggested that a BID could help businesses adapt to the changing national funding landscape and provide a potential alternative to the current IP model.

Cllr Steve Sims, Lead Member for Economy, Tourism and Transport said: “The Islands' Partnership will use the information they receive from survey respondents to assess whether they wish to proceed with a proposal to set up a Business Improvement District on the islands. I therefore encourage all business owners across the islands to find out as much as they can about Business Improvement Districts in order to decide whether they wish to complete the Islands' Partnership’s survey.

Whilst the Council is happy to fund the development work and will be submitting its own response as a business rate payer – the decision on whether or not a Business Improvement District would benefit the islands sits with the business community.”

Explanation of the Council’s role in enabling the business community to consider a Business Improvement District

Following approval from Full Council in May to progress this work, a business case and options paper will be developed by Inner Circle Consulting. A report will then be taken to the IP for consideration in light of feedback from their consultation.

If the IP (the potential 'Business Improvement District Proposer') concludes that the idea is both supported by the islands’ wider business community and worth progressing, the organisation would make a formal proposal to the Council and notify the Secretary of State. Amongst other elements, the proposal documents should include the following (to be established in light of views from local businesses and the Council):

  • a description of the services to be provided and how they are additional to those provided by the Council
  • the levy rate and any reliefs to be given
  • the size and scope of the BID
  • the governance arrangements of the body responsible for delivery of the BID arrangements (the 'BID body'')
  • the terms of reference, means of enforcement and practicalities for the collection of the BID levy 

The Council would then be responsible for managing a ballot on whether a BID should be established for Scilly. Businesses would be entitled to 1 vote per premises that is subject to the levy. For the Council to approve the creation of a BID, over 50% of the total votes need to be in favour, and this portion of the votes must represent more than half of the total rateable value of all votes cast. As the owner of 23 business rated premises, the Council would get 23 votes in the event a ballot was prompted. Further detail about the ballot process and how BIDs can be established and managed can be viewed in government’s BID guidance and best practice document.

The Council would have to consider potential impacts of the BID proposal on the community and on its own policies and services (such as those relating to planning, licensing, protection of the natural environment or enforcement, for example). This is because it can decide to veto the proposals within 14 days from the date of the ballot if it finds that the arrangements are likely to:

  • conflict to a significant extent with an existing policy; or
  • place a significant financial burden on any individual or class of ratepayers because of manipulation of the area or the structure of the levy

Explanation of what the Council’s role would be following the creation of a Business Improvement District

The Council would manage the billing, collection and enforcement of the levy and would hold the levy in a ring-fenced revenue account on behalf of the established BID body. Local authorities are prohibited by legislation from making a profit out of collecting and distributing the levy.

As a business rate payer, the Council would also be required to pay the levy for each of its business rated premises. It is estimated that this would present a future budget pressure of an amount in the region of £4,000 to £16,000.

Explanation of what happens at the end of the 5-year term

Once the 5-year term had completed, the Business Improvement District would automatically cease unless the BID body wanted to continue its activities, in which case it must prepare a new business proposal and hold a new ballot well ahead of the end of the term.

Publishing date: 
Thursday, 26 October, 2023