Charities are going to have to hand over thousands of pounds a year to Westminster Council as they are forced to pay business rates for the first time.
Legally, charities are exempt from paying 80% of rates – which are determined by the size of their premises – and historically the council has given them 100% exemption.
Now more than 70 charities in Westminster face having to pay 10% each year as the council contends with a dwindling budget.
Among them is Paddington Arts, which recently lost an annual grant of £40,000 when the council scrapped their entire arts budget.
Steve Shaw, director of Paddington Arts, said the charge was like a “slap in the face” from the council.
He said: “They are taking our grant away and at the same time trying to charge us money. Instead of giving us money to support us, they are now saying we should give them money, which means instead of running a programme for the kids, we will be giving money to the council.”
Mr Shaw painted a bleak picture of the future for Paddington Arts, adding: “We are not going to go out of business on the 1st of April 2014, but unless we can replace that money we will go out of business – whether its 18 months, two years or further down the line.”
Charities put their case to the council who then decide how much they should pay from zero to 20%.
Mr Shaw said they had enjoyed a long-term relationship with the council and was confused as to why they were being penalised for the good work they do.
He said: “We had two letters of support from long-standing council officers saying we do good work in the community, we work in partnership with the council. We are not a national charity, we are a small local charity, working with the community, reaching the parts of the community that the council can’t reach.
“I can reel off the good work that we do, but the council is fully aware of it.”
Labour councillor Barrie Taylor said: “In these times of brutal cuts by the local authority, in terms of grants – £350,000 arts and culture reduced to zero next year – this additional burden amounts to a minimum of £3,000 to £4,000 a year and will produce a sink or swim position for many local charities.
“We imagine that it is not the intention of Westminster to force organisations out of business, and our call for a freeze on the current levels of discretionary relief is no different to the council’s policy to freeze council tax levels.”
Cllr Melvyn Caplan, Westminster City Council’s cabinet member for finance and customer services, said: “Charities can apply for up to 80% rate relief, and up to 20% discretionary relief can be awarded on top of that.
“At present we are reviewing 70 cases where discretionary relief is being received, and those cases are looked at by a cross-party panel of councillors. It’s important to stress that we look at every application on its merits.
“In the case of Paddington Arts, they receive 80 per cent mandatory relief.
The council’s rating advisory panel recommended in June this year that the level of discretionary relief be reduced from 20% to 10% with effect from April 2014.
Therefore, the current level of relief will remain at 20% for 2013-14 and the current rate bill is unaffected – i.e they will have nothing to pay until next year.
“There is no doubt this is a tough climate for businesses and non-profit organisations alike.
“But with local authority finances under huge strain, the council’s job is to ensure we support frontline services and carefully consider the use of our scarce resources.”