Urban Governance: The Growing Importance of Business Improvement Districts (BIDs)

BIDs (Business Improvement Districts) across the UK are playing an important role in supporting local economies, both in rural areas and small and medium-sized towns.

There are now 179 BIDs in operation across the UK, with a total BID levy income across the UK and Ireland of £63 million (with an additional £130.3 million raised in match funding).

So, what are BIDs? What is their approach? And what is their future direction?

BID beginnings

The introduction of BIDs in England in 2004 sought to build on a policy originating in Toronto, Canada and operating at large throughout North America.

Representing a move towards what Kevin Ward – leading commentator on the mobilisation of the BIDs model – describes as ‘entrepreneurial urbanism’; BIDs were first welcomed into the UK as a means of defining local political economies and coping with the management of ever-evolving towns and cities. The integration of the BIDs model into UK society throughout the last decade represents a further step change in service provision and governance being offered outwith State control and demonstrates the increasing emphasis now placed on partnerships and collaborations between stakeholders beyond Government, with an increasing transfer of responsibilities to civil society.

What is a BID?

Business Improvement Districts are partnerships between local authorities and local businesses which work towards the provision of additional services and/or improvements to a specified geographical area.

The BID is led by the collaboration between the public and private sectors – the local authority on the one hand and the area’s local businesses on the other. By bringing together stakeholders from a defined geographical area, the BID can decide, direct and deliver projects and activities that are geared towards producing direct benefits for the ‘BID zone’.

How is a BID formed?

A BID can be set up by the local authority, a business rate payer or a person or company whose purpose is to develop the BID area, or who has an interest in the land in the area.

The process is as follows:

  • A proposal is compiled for initial consideration after clear consultation and engagement with stakeholders. The proposal is then formalised in a business plan outlining governance arrangements, delivery guarantees and performance indicators
  • A local authority may veto the proposal if the ideas and arrangements proposed are justified to be in conflict with any existing policy
  • A BID must be voted in by a ballot run by the local authority or outsourced by the authority to a third party. A successful vote constitutes more than 50% of votes cast in favour of the BID and the positive vote must represent more than 50% of the rateable value of the votes cast
  • BIDs are funded in whole or in part by a levy additional to the non-domestic rates levy (typically 1% of the rateable value, although this may be higher in some instances), with the money ring-fenced for use in the BID’s locality. BIDs can choose to exempt certain businesses from paying the levy (and therefore from voting in the BID ballot)
  • A BID’s mandate is for a maximum of five years. A BID wishing to continue beyond five years must reaffirm their mandate through a re-ballot, based on a further proposal.

British BIDs – the industry body for Business Improvement Districts – notes that although the BID mechanism is flexible and able to produce BIDs of various scopes and sizes, the average size is 300-400 hereditaments (i.e. the number of properties liable for the levy; the smallest having fewer than 50 and the largest over 1,000) and the annual levy income typically between £200,000-£400,000 (as low as £22,000 per annum and in excess of £3 million).

Since the first BID launched in England in 2005, BIDs have emerged outside of the larger cities, forming in rural areas and small and medium-sized towns. At the time of the British BIDs 2014 survey, there were 179 BIDs in operation across the UK.

BIDs and the funding landscape

As part of its 2014 annual nationwide survey, British BIDs identified that the total BID levy income across the UK and Ireland as at 1 April 2014 was £63 million with an additional £130.3 million raised from other sources. As such, BIDs are seen as successful in attracting funding from streams other than the BID levy.

British BIDs notes that BIDs are particularly attractive to public sector funding bodies due to the private sector match-funding available through the BID levy. Some examples of such funding include:

  • A three-year £203,000 Welsh Government funding package announced in April 2014 to support the development of nine BID proposals in Wales
  • One-off seedcorn funding of up to £20,000 provided by the Scottish Government for the development of proposals for BIDs in Scotland
  • A Loan Fund scheme launched by Government in October 2013, making loans of between £10,000 and £50,000 available to support the successful growth of new BIDs in England

Funding streams are easily identified through professional funding services such as GRANTfinder, which house thousands of funding opportunities in one place. Sarah Nelson, BID Manager at Mansfield BID notes how a subscription to such services will support the BID’s offering to the local area:

‘Mansfield BID invested in the GRANTfinder service to help businesses in the town centre looking for funding opportunities. Working in real time and with the ability to input precise searches, we help look for a raft of funding and grant opportunities and receive the latest funding alerts which are then communicated to BID levy payers. Businesses can also let us know if there is a particular project or area of development that they would like a search running for.

‘We are the first BID in the country to use this system and are very excited that we can offer this service. Businesses in the town have voiced positive opinions on how GRANTfinder is of real benefit to Mansfield and its individuals, providing access to potential funding that generic internet searches just cannot provide.’

The future of BIDs

Whilst BIDs have thrown into question issues regarding geographic inequality and private sector dominance – discussed at length by Claudio De Magalhães, Reader and Associate Professor in Urban Regeneration and Management at the University College London in his 2012 work – the BIDS model is now implemented on a global scale with over 1,400 operating worldwide. Deemed by many as successful and transferable, trends would suggest that BIDs will continue to grow and evolve across the globe.

The Portas Review, published in December 2011, carried out an independent review of the UK’s town centres and high streets, acknowledging the success and failures of BIDs and proposing recommendations for developing the BID model into ‘Super-BIDs’ with greater powers and responsibilities. Portas noted that: ‘New Super-BIDs would develop a dynamic strategic vision for their towns. Super-BIDs should be about more than just ‘grime and crime’ and should work in much more of a strategic partnership to shape the thriving high streets of the future I want to see’.

The Government response to the Portas review in March 2012 claimed to fully support the review’s recommendations but did not endeavour to create any of the suggested ‘Super-BIDs’. Nevertheless, the creation of the £500,000 Loan Fund as a direct response and further Government undertakings into understanding the BID environment – including the 2014 Government Review of Business Improvement Districts and the March 2015 Review of Business Improvement Districts Consultation – signals that there is real impact and value seen at a national level and that the BID function may be liable to change in the future.

Although BID numbers continue to grow in the UK, their future in the context of political, economic and social changes is still to be determined. In an increasingly complex and inter-connected landscape, the BIDs model will remain flexible in responding to shifting pressures, the wider debates of public vs. private and the changing governance nexus of business, government and other stakeholders.

For more information on how Idox is supporting BIDs in helping local economies grow, contact grants.marketing@idoxgroup.com

By Chelsea Nattriss, Idox

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