This section defines a BID and details the processes involved in setting up and running a BID in the UK.
- A BID is a business-led and business funded body formed to improve a defined commercial area.
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The BID scene in Britain
- The majority of BIDs exist in town centres, however there are increasing numbers in industrial areas, as well as commercial and mixed-use locations.
- The BID mechanism allows for a large degree of flexibility and as a result BIDs vary greatly in ‘shape’ and size. You can see the full range of BID sizes (number of businesses in a BID area) and annual BID levy incomes in our BID locations section.
- The average size of a BID is 300-400 hereditaments, with some of the smallest having fewer than 50 hereditaments and the largest at 2,500. Annual income is typically £200,000-£600,000 but can be less than £50,000 per annum or over £2 million.
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- Legislation enabling the formation of BIDs was passed in 2003 in England and Wales, (with subsequent regulations published in 2004 and 2005 respectively) and in 2006 in Scotland.
- The first BID in Britain went to ballot in December 2004.
- The first Scottish BIDs went to ballot in March 2008.
- Since then the number of BIDs in Britain has risen steadily.
- Details of all BIDs and BID ballot results can be found in the BID locations section.
- BIDs were first established in Canada and the US in the 1960s and now exist across the globe, including in South Africa, Germany, Japan, New Zealand and Australia.
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BID development and the ballot
- A BID can only be formed following consultation and a ballot in which businesses vote on a BID Proposal or business plan for the area.
- The ballot is run by the local authority or outsourced by the local authority to a third party.
- All businesses eligible to pay the levy are balloted.
- In the UK, for a BID to go ahead the ballot must be won on two counts: straight majority and majority of rateable value. This ensures that the interests of large and small businesses are protected.
- There is no minimum turnout threshold.
- The BID Proposal or Business Plan sets out businesses’ priorities for improvements for the area and area services, as well as how the BID will be managed and operated.
- This document becomes legally binding once a ballot has been won and becomes the framework within which the BID will operate.
- An Operating Agreement is entered into between a BID and their local authority governing how the BID levy monies are collected and administered and passed over to the BID.
- BIDs enter into baseline agreements with the local authority and other service providers which guarantee the level of service provision in the area. These ensure that any services the BID provides are truly additional.
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Post ballot: BIDs in operation
- A BID is funded through the BID levy, which is a small percentage of a businesses’ rateable value. The majority of BIDs charge 1% of rateable value, however there are good reasons why some have opted for higher levies, particularly in locations with lower rateable values such as industrial areas.
- Once a ballot is successful the BID levy is mandatory for all eligible businesses. BIDs can choose to exclude certain businesses from paying the levy (and therefore from voting in the BID ballot). Many BIDs exclude the smallest businesses and charities; some exclude certain business sectors or types of business.
- The BID levy is collected by the local authority into a ring-fenced account (called the BID Revenue Account) and passed to the BID Company for use on the projects and services set out in the BID proposal.
- The BID levy is on business occupiers rather than property owners. This is in line with the business rates system in the UK and differs from BIDs elsewhere in the world where the levy is on owners.
- BIDs are often successful at attracting funding in addition to the BID levy. They are particularly attractive to public sector grant making bodies (such as Regional Development Agencies) due to the private sector match-funding available through the BID levy. Local authorities, property owners, and businesses outside the BID area can all provide additional income for BIDs through voluntary agreements.
Projects and Services
- The improvements made by a BID are determined by businesses and can include core services such as additional cleansing and security or more wide-ranging projects such as recycling, business support, improved infrastructure, area branding and promotion.
- BIDs work closely with their local partners to achieve the improvements that businesses desire for an area.
- Many projects are focused on innovative solutions and increasingly are aimed at making cash savings to the businesses thereby striving to make the BID levy cost-neutral to the BID levy payers.
Governance and Management
- The vast majority of BIDs are not-for-profit companies limited by guarantee.
- BIDs set out how they will be governed in their BID Proposal and Company Articles of Association.
- Most BIDs are governed by a board made up of BID levy payers representing the BID area.
- The size of BID management teams vary with the size, focus and budget of each BID but will generally encompass management and administration, business communications, and operations.
- It is important for BIDs to measure performance to demonstrate to levy payers the improvements it is making to an area.
- Many BIDs commit to formal Key Performance Indicators and increasingly BIDs are applying for Bb Accreditation and Bb Impact Standard to demonstrate their quality standards and credibility in the industry.
- It can be difficult for a BID to demonstrate their role in improvements that may be the result of BID efforts in combination with a number of other factors, for example: a reduction in crime in the area, or cleaner street.
Benefits to Businesses
The benefits of BIDs cited by businesses are wide-ranging and include:
- Businesses decide and direct what they want for the area
- Business are represented and have a voice in issues effecting the area
- BID levy money is ring fenced for use only in the BID area – unlike business rates which are paid in to and redistributed by government
- Increased footfall
- Increased staff retention
- Business cost reduction (shrinkage, crime, joint procurement)
- Area promotion
- Facilitated networking opportunities with neighbouring businesses
- Assistance in dealings with the Council, Police and other public bodies
- BIDs operate for a maximum of five years. If they wish to continue they must go through a renewal ballot process to secure another BID term of up to five years.
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