Editorial: Should sector save at councils' expense?

Tania Mason, deputy editor

The dispute between the Corporation of London and Charity Logistics, which is likely to wind up in the High Court, presents something of a moral dilemma for the sector.

It concerns a provision within rating law that determines how much local authorities can charge by way of rates on commercial buildings.

Essentially, if a building is empty, the freeholder can claim a 50 per cent discount on the rates due. But if a charity moves into the building, an 80 per cent discount applies. The dispute hinges on whether this discount applies if a charity merely leases the building as somewhere for it to move into if its usual HQ floods or burns down.

Charity Logistics, through its sister organisation the Charity Disaster Recovery Network (CDRN), acts as a conduit between charities that want affordable space for this purpose and owners of offices who can't find tenants. Charity Logistics maintains this is an essential service for charities that also makes use of buildings that would otherwise be standing idle. It has been providing this service for years and makes the point that the corporation has taken two years to turn down its rates relief application.

But with more than a million square feet of office space standing empty for charities, all presumably attracting 80 per cent rates relief - a nice little saving for landlords - it was only ever going to be a matter of time before a local authority challenged the practice.

The Office of the Deputy Prime Minister has also confirmed that it is watching the situation closely - after all, rates money is collected by local authorities on behalf of its masters in central government.

Interestingly, the RSPCA, which arranges its recovery space through the CDRN, says it doesn't pay anything unless it actually needs to use the building. It follows, then, that the landlord saves so much on its rates by getting Charity Logistics on its lease that it doesn't charge for the lease at all - or conceivably is so grateful for the saving that it even pays the CDRN a fee.

Either way, this is a great deal for the CDRN, its charity client and the property owner; but it's not so sweet for the local authority.

Therein lies the dilemma: even if the High Court finds in Charity Logistics' favour, is it really good practice for charities to be causing local authorities to lose income by saving commercial landlords money? Is that really to the public benefit?

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