NE1 and How Business Improvement Districts Work

If you have been to Newcastle Restaurant Week, watched a film on the Quayside in summer or walked past a temporary beach on the riverside, you have encountered the work of a business improvement district.

NE1 Ltd runs Newcastle city centre's BID, and it operates under a legal framework that many of the businesses paying for it do not fully understand.

Here is how it works.

BIDs are funded by a compulsory levy.

A business improvement district is a defined geographical area within which businesses pay an additional levy on top of their business rates, used to fund services and improvements in that area.

The framework was established by the Local Government Act 2003 and the Business Improvement Districts (England) Regulations 2004.

The levy is compulsory once a BID is established, applying to all eligible businesses within the boundary regardless of whether they voted for it. It is generally calculated as a percentage of a property's rateable value, with a threshold below which smaller premises are exempt.

A ballot is required every five years.

A BID cannot simply continue indefinitely. It must be renewed by ballot of the businesses within the area, typically every five years.

To succeed, a ballot must achieve a majority both by number of businesses voting and by aggregate rateable value of those voting. That double threshold means a proposal cannot pass on the votes of a few large ratepayers alone.

If a ballot fails, the BID ends. Several BIDs around the country have been voted down, so renewal is not automatic.

NE1 has operated since 2009.

Newcastle's BID was established in 2009 and covers the city centre, funded by levy contributions from businesses within the boundary.

It operates as a private company limited by guarantee, governed by a board drawn from levy-paying businesses across retail, hospitality, property, leisure and professional services.

Annual budgets, business plans and accounts are published, and the organisation is accountable to its levy payers rather than to the council, though it works closely with the local authority.

The visible work is events.

NE1's most publicly recognised activity is its events programme.

Newcastle Restaurant Week, offering fixed-price menus across large numbers of city centre restaurants, has run for many years and drives substantial footfall into hospitality during traditionally quieter periods.

The NE1 Motor Show has closed city centre streets for displays of vehicles, drawing large crowds. Screen on the Green, Quayside Seaside and Christmas activity fall into the same category.

The commercial logic is straightforward: events bring people into the centre, and those people spend money with the businesses funding the organisation.

Less visible work matters as much.

Beyond events, BIDs typically fund street cleaning above the statutory minimum, additional security and street ranger patrols, floral displays and lighting, and marketing of the area as a destination.

NE1 has run initiatives on the evening economy, including work to extend city centre trading into the early evening, and has been involved in projects covering wayfinding, public realm and business support.

BIDs also act as a collective voice for city centre businesses in discussions with the local authority, police and transport operators, which individual small businesses would struggle to do alone.

There are criticisms.

The compulsory nature of the levy is the most common source of objection. Businesses that voted against, or that opened after a ballot, still pay.

Smaller independents sometimes argue that programmes are weighted towards larger retailers and hospitality operators, and that they see limited direct return for their contribution.

There are also questions, raised about BIDs generally rather than Newcastle specifically, about whether they fund activity that should be provided by local authorities from general taxation, effectively allowing councils to reduce services in the knowledge that the BID will fill the gap.

Supporters respond that BID income is additional and ring-fenced, that businesses control how it is spent, and that the ballot mechanism provides a regular test of whether levy payers consider it worthwhile.

Other BIDs operate across the region.

Newcastle is not alone. BIDs operate in other North East locations, covering town centres and business parks, each with its own boundary, levy rate and priorities.

Some cover industrial estates or office parks rather than retail centres, focusing on security, transport and shared services rather than events.

The model has spread widely across the UK since 2004, with several hundred BIDs now operating.

What businesses should know.

If your premises fall within a BID boundary and above the rateable value threshold, you will receive a levy bill, usually collected by the council alongside business rates.

Levy payers are entitled to attend meetings, stand for the board, vote in ballots and access whatever support programmes the BID offers.

For businesses in Newcastle city centre, engaging with the programme rather than simply paying the bill is the practical response, since the events calendar and marketing activity are designed to be used.

Details of the boundary, levy rules and current business plan are published by NE1 and are worth reading before renewal ballots.

Share your thoughts.

Do you think the BID levy delivers value for Newcastle city centre businesses?