How ULEZ is devastating business in edge of London Borough's like London

The Sun sets over Mill Hill Music Complex

Every year, at this time of the year, I sit down with the bookings and sales from my music business and do an in depth dive into how the business performed, on a week by week basis for the previous year comparing with years before. We use this data to plan such things as advertising strategies, maintenance windows, etc. We analyse what we spent on advertising and how this worked.  This enables us to see what we did right in the year and what we did wrong. It shows trends in our business and enables us to work out how external events impact our business. 

In 2022, the business performed exceptionally well for the first three quarters, then had a drastic and unexpected slump for the fourth quarter. There were two main reasons for this end of year slump. The first was the death of Queen Elizabeth, which added bank holidays and cancellation of gigs, which resulted in a drop off and cancellation of bookings. The second was the world cup, which meant venues were showing football, instead of music.  This resulted in bands not requiring rehearsals. The situation was so bad for us, that we had to take out a loan to pay the VAT for the final quarter. As the final quarter of the year is traditionally the best for us, it really blindsided us. By analysing the data, we now know that if there is another world cup in the Winter (Saudi Arabia?), we will have to build cash reserves to tide us through. In 2022, we actually did some serious studio refurbishment in the summer, with cash we should have earmarked to pay bills. Had we anticipated the world cup effect, we certainly wouldn't. 

When we did some forward planning for 2023, at the start of last year, we anticipated growth of 25% as we went through the year. Our projection was that for the first two quarters this would be 15%, 20% for the third quarter and 50% for the final quarter, as Xmas gigs that didn't take place last year generated decent rehearsal income. We also expected a significant increase in retail sales. We anticipated a 10% growth in this. We have adapted our model, to try and adapt to the post covid world. This worked well generally, but we need to constantly ensure we are on top of trends that damage us.

I spent the whole of yesterday crunching the numbers. I have a lot more work to do on this but some trends are unmistakeable. On the 29th August, The Mayor of London, Sadiq Khan extended the ULEZ zone on the 29th August 2023 to the edge of his jurisdiction. We are located in Mill Hill and are about 1.5 miles from the edge of the ULEZ zone. Approx 40% of our trade comes from outside of the ULEZ zone. Many of the customers for our studios and shop come from Borehamwood, Watford, other parts of Hertfordshire and beyond. Many are musicians with older vehicles. Whilst our prices are highly competetive, any customer with a non ULEZ compliant vehicle (which includes many musicians, who need to ferry gear in vans), now have to pay £12.50 per vehicle to visit us. Adding £12.50 to the cost of a session (or multiples of), makes us relatively expensive. A band of 5-6 people only needs one to have a non ULEZ complaint vehicle for the impact to be huge. 

So how did this affect us? In short, it has been pretty catastrophic. We have seen a 60-75% fall off in customers from outside the ULEZ zone, whilst seeing a 30-50% rise from customers within the zone. Whilst some businesses in central London have seen a benefit from the expansion, as customers who previously wouldn't travel in have traded cars and now are using their services, businesses like us that are on the margin, have been clobbered. We are not alone. People with non ULEZ compliant cars in Hertfordshire, who may have nipped down to Mill Hill to shop, buy services and visit our cinemas, pubs and clubs are now going elsewhere. I'd love to see how cinemas like the Phoenix and the Everyman have been affected. 

Many Londoners got rid of non compliant cars in the lead up to the ULEZ zone. They sold good vehicles off at well under their true value. Most were not scrapped, simply sold to people in areas outside the zone, who rubbed their hands at bargain. Those people are not inclined to spend money travelling into the zone. This means that businesses like ours have been clobbered. The Mayor of London has absolutely no interest in people who run small businesses. He has no interest in people working in music and the creative industries, who require large expensive vehicles to move gear around and who's finances have been devastated by the pandemic. For businesses like ours, which have a huge capital investment in our firms, it makes planning almost impossible. We have to try and work out what our cashflow is going to be for 2024, so we can plan how we spend our money. Before I did a deep dive, I'd have expected a 15% increase on last year for the studios in 2024, as the music industry continues to recover. If we factor in the ULEZ hit, we could actually see negative growth. As best I can tell from our figures, the ULEZ hit will be about 12.5% so that just about takes out any growth we would normally achieve. 

So what can we do? Well we have to decide whether it is even worth bothering advertising in Watford, Borehamwood. We currently target these in Google Adwords campaigns, but we are seeing almost zero traction. We had been planning some more studio upgrades, but we cannot realistically plan these until we can see a couple of months data against last years, to see year on year effect on normal business, as Q4 2022 was  not a normal year to baseline against, so the hit was very hard to estimate. 

It is clear to me that Sadiq Khan is not a Mayor for all London. He is a Mayor for his own, rather narrow vested interests. His ULEZ scheme offered nothing for businesses struggling to recover from the pandemic. Without people like me, who work their socks off and invest huge amounts of money, London would not be the creative hub it has become. One of his first acts was to appoint a Night time Tsar in Amy Lame. Her job was to stand up for people in the creative sector. She has done nothing to make the case for artists and others in the sector affected by ULEZ. 

On a wider note, Mill Hill Broadway, our nearest high street, is seeing more empty units than ever. It is no surprise to me that shops, etc have taken a hit as people living a mile or so away now have to pay £12.50 in ULEZ charges, if they need a pint of milk and they have a non ULEZ compliant motor. 

The real tragedy is that the Tories have chosen a virtually unelectable candidate as a challenger. Whilst her scheme to abolish ULEZ would definitely benefit businesses like mine, she seems to look like a rabbit in the headlines every time she is interviewed. 

Later this year, the studio will celebrate it's 45th Birthday. What is the biggest tragedy is that it seems that both the local council and now the Mayor of London have done everything in their power to strangle us. I am not the only local business owner to feel like this. The Federation of Small Business has done sterling work making our case, but the Mayor of London is not interested. 

Time for the Government to show some imagination to restart the economy

The High Street is changing

The country is at a cross roads. We have run up huge debts. The only way that the UK PLC will recover is by creating an environment for dynamic and creative people to succeed. There is plenty of empty space. Much of this has Landlords who have to pay business rates on empty units. There are also a lot of people with time on their hands, skills and ideas. There is also a third group. People who are wealthy and are receiving little or no interest on their savings. The reason why we see so many charity shops, is because the sector is exempt from business rates, so it is relatively cheap to set up such a shop. The new bar in the Broadway stood empty for a couple of years, following the departure of HSBC. Several businesses tried to take over the unit, only for it to fall through. One of the biggest impediments is planning permission. This can often take months. There are costs and as the High Street changes, only the big chains often have the staying power to see through applications. That is why the Old Lloyds bank is now a Domino's pizza. They were prepared to jump through all the hoops to get the premises redesignated.

We need to get the nation back to work. We need to give the young entrepreneurs a chance to compete. We need to level up the playing field. I am proposing that we the Chancellor launches a Covid19 Business Recovery Scheme. There are two strands to this. I should mention that neither of these would benefit me personally.

1. Covid Business recovery grant. I am proposing that any business that had to shut during the lockdown, and was not in receipt of a grant or rates relief, should get a £10,000 grant, in the form of a tax credit. This will go some way to helping such businesses get through this period. The grant should be available to any business that pays business rates and has at least one employee on PAYE. I would suggest that any business with a turnover of under £250,000 should be able to apply.

2. Covid business launch scheme. We need to get people out and starting businesses. Setting up a new business is a costly and risky business. Often Landlords are unwilling to grant short leases to new businesses. However, as they are paying rates on empty premises, there is an incentive. I would propose that the scheme would allow a rates free period of six months,  a 75% reduction for the second six months, followed by a 50% rebate for the second year. The Landlord would grant the tenant a lease for six months, with an option for a second six months, then a year. The business would simply register with the local authority. The only condition would be that at least one employee would be employed for 35 hours on at least the national minimum wage. I would also give people investing in such businesses a tax break similar to the EIS scheme, to make it attractive to people. The scheme would limit to two the number of such businesses that could operate from a premises in a two year period. The business would not be able to have any association with the Landlord. I think many people would take advantage of the scheme to launch pop up businesses to see if they work. Six months trading would demonstate whether the business is viable. Investors would have the opportunity to invest in innovation. I would also waive planning restrictions on such businesses. So if a small cafe wants to take over a bank premises, they would be granted an exemption for the change. If the business was still in the premises and operating after two years, they would get an automatic change of use. So if a small cafe wanted to take over a closed bank, then this would be automatically allowed. I would allow councils to place restrictions on areas or of special historic or economic interest, so Churches or important industrial areas had a degree of protection. I would also limit the scheme to premises with a rateable value of under £75,000.

If the business failed or moved during the period, the planning would revert to the original usage. I would put some limits, so that bookmakers and certain other businesses would not be able to take advantage of the scheme. I would also limit it to UK nationals with a valid NI number. I am convinced that giving investors a tax break to invest in businesses would generate a huge amount of economic activity. I would put a restriction that the business owners could only take money out of the company via PAYE, to ensure that the scheme is not abused. After two years, all restrictions would be lifted and the business would pay regular rates. From a local authority perspective, I would allow local authorities to claim a proportion, say 20% of the lost rates back from central government. This money would be ringfenced for business support, high street regeneration and schemes of community benefit.

The scheme would benefit all.
1) The Business owners would find it far easier and cheaper to start businesses.
2) The locality would benefit from regeneration, which would largely be funded by private investors.
3) The Investors would benefit from a tax break and the opportunity to invest in dynamic new businesses
4) The Exchequer would benefit from the generation of tax income from the new employees. I believe that over the course of the scheme, this would easily offset the loss of rates and tax breaks.
5) The local authority would benefit from the income from the scheme.
6) The Landlords would benefit from not having to pay rates and a more vibrant market for premises.
7) The economy would benefit from the innovation of a new generation of business owners.

I have run a business for forty years and I've mentored and assisted many other people who have started successful businesses. Not all businesses are successful, not all people who think they can run a business can, but all work hard. All are prepared to take chances. In the last weeks, since the restrictions started to be lifted, I've been working 60-70 hours a week. It is what you have to do. I believe that people who are prepared to do this, occasionally need a little help.

I have been thinking about High Street regeneration quite a lot recently, and what makes a successful business. As I walked down Mill Hill Broadway over the weekend, I looked at the activity occurring. We will soon have a new bar, where the HSBC used to be. I hope they will do well, they started the fit out and work before lock out, so I hope they will not see their plans scuppered. Some of the shops were still shut, with no indication of when they will reopen. Some have been open since the 16th. I try and buy local and so I was very pleased that Gary Rockman opened his jewellers then. That meant I could buy my wife a necklace for her birthday. Gary's shop is an example of the type of business that survives the so called demise of the High Street. Gary is an expert and he stocks pieces that you really need to see close up to appreciate. He is also a  very nice chap and has a loyal customer base. 

Sadly there are too many units that have closed down, some for a considerable period of time. During lockdown, we lost the last of our big four banks, with the demise of Barclays. This pattern is repeated across London and the rest of the country. During the lockdown, we updated one of our most popular blogs from 2009. This was a list of the shops in the Broadway in 1958 compared to 2009. Updating it with the current situation, I realised just how much empty space there is. Whilst this is clearly not a good thing, it is clear to me that this actually could present a great opportunity for the UK economy. 

Talking to Gary and also Gerard, the butcher on Daws Lane, it is clear that there is a huge demand for quality independent businesses. I run a small business in a small industrial estate. I have seen first hand how random the rules about covid relief have affected my neighbours. Some have benefitted and some have fallen between the cracks. Whilst I understand that the Chancellor has a monumental job on his hands, those that fall between the cracks, really have suffered and there is absolutely no way that they can get anything, because as we all know, when 'the computer says no' that is the end of the matter in 2020. It is a shame that there isn't a 'hardship fund' for such people, where those who fall through the cracks, can talk to a human being with a bit of common sense and discretion. Small business is good for the economy. It provides jobs and innovation and most large businesses started as small businesses. That is why I believe the sector should lead the recovery.