Agenda item

Report attached.

The Cabinet considered a report of Councillor Marlene Haworth, Deputy Leader of the Council, seeking a continuation of the support for the ground floor indoor market hall traders by extending the current period of rent concessions.

Councillor Haworth highlighted key elements of the report as follows.  The main proposal was to extend the period of rent concessions for ground floor traders.  The traders had been supported through lockdown and although COVID-19 restrictions had now been lifted, despite some initial improvements in footfall, the economic downturn and other pressures on household spending meant that trading conditions were still difficult.  She was delighted to be able to propose the extension to the support already provided.  Councillor Peter Britcliffe, Portfolio Holder for Levelling Up, added that it was vital to continue to support market traders, particularly given their location at the heart of Accrington Town Centre.  He hoped that the ground floor cafes would also be eligible for this support.

The Leader added that the extension would run for nine months, from 1 April 2023 to 31 December 2023.  He summarised the support which had been provided previously.  A second decision was being proposed in connection with the introduction of a service charge in certain circumstances for the balcony units, following an application from a potential tenant who would require significant electrical energy usage.

Councillor Melissa Fisher, Joint Deputy Leader of the Labour group, made some comments and asked a number of questions as follows:

• The Labour group supported the use of concessions.
• Could a discount be offered to the balcony units, particularly as problems with the lift might have reduced footfall upstairs?
• Some concerns had been expressed about plans to move traders to temporary accommodation on Broadway for up to 14 months during remodelling, subject to the success of the Levelling Up Fund bid.

Councillor Haworth responded that the lift had been a cause of concern, as parts were becoming more difficult to source.  She was currently discussing with officers the possible provision of a new lift.  It was hoped that this could be installed within the next few months.  In respect of the relocation of traders, the use of Broadway was one of several suggestions discussed with traders, including the use of porta-cabins, pop-up stalls or empty shops.  No firm plans had yet been made, as this was dependent on the Levelling Up Fund bid.  However, traders would be kept informed.  The Leader added that engagement would take place with traders when any firm options were being considered.  The option chosen would depend on the nature and time requirements of the refit, which could involve staged moves or a full closure of the market hall.

Councillor Aziz asked if the service charges proposed for the balcony units and the fact that this was at the discretion of officers, might force traders to leave the market hall.  The Leader reiterated that this would only be in exceptional circumstances.  Councillor Haworth indicated that the matter had been discussed with the potential trader, as the Council simply wished to offer a deal which was fair.

Approval of the report was not deemed a key decision.

Reasons for Decision

Throughout the downturn in trading on the Borough’s high streets and difficulties throughout the COVID-19 lockdown/restrictions, Cabinet had supported the market hall traders through various rent concessions.  Whilst the COVID restrictions had been fully lifted and footfall levels were slowly improving, unfortunately there haD been a dramatic downturn in the economy.  Businesses were now facing severe cost increases and there had been a reduction in household income/spending levels not seen for over half a century.

The Council, wishing to support the indoor market hall traders, had approved a number of concessions over the past 4 years (listed below).  However, without any further extension, the current rent concessions would expire at the end of this financial year.

• a 50% concession on rents and service charges for two months in 2018
• a permanent reduction in rents of 13.4% in 2019
• a 30% concession on rents for a period of three years in 2020
• a 22.5% concession on rents for twelve months in 2020
• an extension to the 22.5% concession on rents for a further six months in 2021
• a further extension to the concessions on rents until 31 March 2023 in late 2021

Whilst there was a ‘potential’ loss of income circa £24k from extending the rent concessions, this assumed traders were able and willing to pay the level of rent set many years ago when trading conditions were very different.  Where rents were too high and not aligned with other local commercial rents, there was a risk many traders would simply leave the market hall, meaning all of a trader’s rental income would be lost.

If approved, the terms of the concession being proposed would be as per previous agreements:

• that traders continue to make all monthly rent or other payments via Direct Debit and adhere to the Council’s Market Regulations.
• where a current trader was in rent arrears, this concession would not be applied to the arrears and if applicable, any credits due would be used to reduce the outstanding debt.
• where a trader was up to date, and if applicable, any credits would be returned in full.

The report did not propose any concessions to service charges and traders within the balcony units or outside Peel Street Kiosks would not be eligible for the proposed rent concession.

Historically, there had been no separate service charges applied to the balcony units within the Market Hall and rents had been set low to provide ‘incubator units’ for new a business to test the market with their offering, before hopefully moving on to bigger premises in the town centre.  There had been a number of recent examples to highlight the success of this offer.  Whilst the vast majority of balcony tenants only had simple strip lighting and one or two small appliances, recently, the market manager had been approached by a potential tenant needing the use of large chest freezer and fridge.  Given the recent rises in electricity costs and the use of these very energy hungry appliances 24/7, the electric cost could be greater than the rent paid by the tenant.

The small balcony units were unmetered and, therefore, it was not possible to take meter readings.  It was therefore proposed that the Executive Director (Environment) be given authority, following consultation with the Portfolio Holder, and at their sole discretion, to agree the addition of separate service charges to new leases to enable service costs, including utility costs, to be recovered from tenants where such costs were not otherwise already the responsibility of the tenant.

Alternative Options considered and Reasons for Rejection

The Council could let the current rent concessions expire.  However, this had been rejected because the indoor market hall traders continued to raise concerns around high rents compared to other commercial units in the town centre and trading viability if the concessions did not remain.

The Council could look to make the concessions permanent, rather than an extension.  This had been rejected given the potential redevelopment works in the market hall which would necessitate decanting traders from December 2023 and most likely there would be new agreements/leases when traders returned.

Resolved                                 (1)   ThatCabinet notes the report and the work undertaken by the Market Manager in continuing to implement improvements within the market hall, which contributes to the retention of existing traders.

(2)   That Cabinet approves an extension to the current rent concessions applied to ground floor market hall traders for a further 9 months from 1 April 2023 to 31 December 2023 and notes the reduced income levels within this period.

(3)   That Cabinet supports a scheme to introduce a service charge for balcony units, as set out in Paragraphs 3.8 and 3.9 of the report, and delegates authority to the Executive Director (Environment), following consultation with the Legal Services Manager, to incorporate this charge, where applicable, in new leases.