Letter: Free Parking Could Boost High Street But Council Services Could Suffer

Published on: 26 Jun, 2019
Updated on: 28 Jun, 2019

From George Potter

Liberal Democrat borough councillor for Burpham

In response to: Ten Restaurants And Shops Close In High Street And North Street Within Three Months

A “review of parking charges and restrictions to try to combat falling footfall in the town” is a very sensible, and logical, suggestion. Unfortunately it’s very unlikely to happen due to the perverse way in which local government is financed.

Business rates are set nationally as a fixed multiple of property values. So businesses in areas with high property values (like Guildford) end up paying far higher business rates in addition to high rents.

Although Guildford Borough Council is responsible for collecting these business rates it only gets to keep 5% of them. The rest of the money from them is paid to central government.

Meanwhile parking charges make up a large chunk of the council’s income.

So, whilst the council could introduce more free parking, and whilst that would probably help increase footfall and boost our high street shops, doing so would lead to a large drop in the council’s income and any boost in the amount of business rates being paid would go almost entirely to central government. The high street would probably benefit, and so would central government coffers, but the council would be left out of pocket and would probably have to cut public services or raise council tax to make up the shortfall.

That’s the perverse logic that the current funding settlement forces upon local government. If they help local businesses then councils have to bear all the cost of doing so while central government gets all the benefit.

And, remarkably, it could be about to get even worse. One proposal being bandied about in Whitehall is the idea of “negative business rates retention”. Or, to put in plain English, the idea that wealthy areas, like Guildford, should pay 100% of their business rates to central government, plus a bit extra. And that bit extra would have to be paid for through council tax.

So if that terrible idea ever comes to fruition then Guildford Borough Council would be put in the position where financially it made more sense to have fewer businesses in the area. Yet as crazy as that sounds, it’s an idea which is being seriously considered by the government.

It’s no wonder that local economies are struggling so much all across the country!

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