Business rates: 'Traders will be badly affected for more years'

THERE can be little doubt that small businesses and shops have borne the brunt of the pain over work on the trams.

So it will come as no surprise to learn that the assessors' department is currently dealing with almost 1,200 appeals against the amount demanded in business rates this year – and a fresh flood of appeals can be expected after 1 April.

The tram compensation scheme for small businesses was a good idea. To date, more than 400 traders along the route have submitted claims for up to 4,000 each to take account of lost business. Three-quarters have been on Leith Walk, which has endured two years of roadworks without a single foot of track being laid.

Earlier in the year, contractors started digging up Shandwick Place for a second time and, with works expected to continue until mid-2011, more appeals will come from this area, too.

But one drawback of the compensation scheme is that it only applies to relatively small businesses with a rateable value below 28,000.

This automatically excludes the larger traders in areas like Princes Street which continues to be one of the hardest hit parts of town.

The latest data from the city council's 18 footfall counters shows that the average number of people visiting the city centre was down 5.6 per cent last August compared with 2008. The biggest declines were in areas where there have been tram works, with the three counters on Princes Street recording 14-16 per cent fewer pedestrians.

This means further problems for traders already being damaged by the recession. Retailers suffered their worst February in 11 years, as consumer confidence remained low and bad weather kept shoppers indoors. Annually, sales fell 1.1 per cent.

However much TIE sticks to the line that it is confident of delivering the project close to schedule, it is increasingly difficult to see how this can be achieved when the timetable has slipped so badly. It therefore must be expected that traders will continue to be badly affected for more years.

Businesses should benefit from trams in the long run, but many simply cannot wait for them to start delivering customers, even if by some miracle that does happen in 2011 or 2012.

Meanwhile, given the high rates they pay, they have a right to expect something in return for the inconvenience and losses they are suffering.

The compensation scheme will almost certainly have to be extended. It may also be time to revisit it and give consideration to raising the threshold on the numbers and sizes of businesses that are eligible.