London firms drive for congestion charge compensation

Data from the Valuations Office Agency, which sets business rates, showed that 12,226 firms in the capital had applied for rate reductions because of a severe drop in customer numbers caused by the £5-a-day toll on motorists.

Nearly 5,000 businesses lodged applications for rate cuts in Westminster alone, a figure seized upon by neighbouring Kensington and Chelsea council as a compelling reason not to extend the zone to their borough.

London Mayor Ken Livingstone said that he will expand the congestion zone westwards if re-elected next year, a move which will affect thousands of small firms in Kensington and Chelsea.

The borough’s council and local businesses are strongly opposed to the plans, claiming that the charge has cut the number of visitors to central London, forcing many companies to move or go bust.

Merrick Cockell, leader of Kensington and Chelsea council, said that he had repeatedly called on Livingstone to abandon plans to enlarge the congestion charge zone.

“Now the real cost to business is starting to emerge, and it is frightening. I predict a massive reaction from businesses in this part of London if the mayor’s proposals to extend the scheme go ahead.

“The Valuations Office Agency would be inundated with appeals from small businesses asking for a reduction in their rates, and I suspect many will be forced to vote with their feet.

“This could have major ramifications for the whole economy too – the west end of London generates a huge amount of business rates for the government. Take that away and we will all be looking at bigger council tax bills and a less than rosy economy,” he said.

The congestion charge, which is now over a year old, has been hailed as a success by Livingstone and most political commentators.

However, studies conducted on the scheme’s anniversary revealed that the vast majority of London firms felt the charge had damaged their business more than other factors such as the war in Iraq and transport problems.

Many businesses have been forced to move out of the congestion area, with firms operating on the zone’s border suffering most due to the unwillingness of customers outside the zone to pay an extra £5 for their services.