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Out of Home Advertising: Unlocking Investment in Infrastructure

Tim Lumb, Director of Outsmart

Tim Lumb, Director of Outsmart | Advertising Association

4 min read Partner content

Between 2008 and 2021, the Out of Home advertising industry invested £1.1 billion in social infrastructure across the UK. However, the business rates regime has a disproportionate and detrimental effect on the industry, restricting the industry’s ability to invest in local communities, and putting at serious risk the ability of Local Authorities to comply with the Government’s own Net Zero Strategy. These effects will only be compounded by the Non-Domestic Rating Bill. Exempting social infrastructure sites from business rates will unlock additional investment directly into local communities.

The Out of Home advertising industry is perfectly positioned to support councils’ efforts to reduce GHG emissions through the industry’s funding of vital social infrastructure (most notably, bus shelters). In 2021 alone, the industry invested c. £90 million in social infrastructure. This investment by private companies at no cost to the public purse relieves pressure on council budgets, enabling councils to fund and provide other public services.

This £90 million investment takes the form of innovative infrastructure to help councils meet their sustainability targets.  Major operators have made ambitious emission reduction commitments, working to reduce the industry’s environmental footprint.  Social infrastructure assets regularly include additional features such as air quality sensors, solar panels and living roofs.

This is a clear win-win both for Central and Local Government. With Central Government already spending over £22 million to help local authorities deliver reductions, through the Local Net Zero Programme, Out of Home advertising quietly plays a major role in supporting one of Government’s flagship policies by augmenting this public spending with an additional £90 million per year on infrastructure.

Councils, whose budgets are stretched, also benefit directly. The funding provided by the industry goes beyond mere installation of assets. Site operators also pay rent and revenue/profit shares to council landlords of £143 million per year. Remember, these rental amounts are paid directly to councils, providing a vital revenue stream that councils can reinvest into their public service priorities – whether that be adult social care, affordable housing, or youth centres.

Just as councils have close ties to the communities they serve, Out of Home is responsive to the priorities of the people who live in and around their sites. One striking (and potentially lifesaving) example is the industry’s installation of voice activation for the visually impaired and defibrillator units.  In partnership with Community Heartbeat Trust, one Out of Home operator has installed 180 public-access defibrillators within their Community Information Hubs.  These have been used over 500 times in 16 cities across the UK.

new legislation from Government is putting this all at risk.

Another example of this close community engagement by industry players is when one Out of Home operator funded the River Roding Trust’s ambitious re-greening and rejuvenation project along the River Roding in Barking.

Social infrastructure sites are also used to display public service messaging for councils and Government and to support charities and small businesses with free or discounted media space – totalling £27 million in 2021.

All of the above is funded by advertising revenue, with a report by PwC showing that the industry is investing more than 40% of advertising revenue back into local communities, public services, infrastructure and employees.

However, new legislation from Government is putting this all at risk.

Under changes to the business rates regime proposed by the Non-Domestic Rating Bill, business rates may increase every 3 years.  The industry’s agreements with councils typically have a term of 7 to 15 years.  Business rates may therefore increase at least five times during a standard contract term. 

In short, regular changes to business rates make financial planning for these contracts difficult, requiring the industry to hedge against future rates increases.  This lack of certainty directly and adversely impacts the industry’s ability to invest in local communities.

Let’s take a closer look at why reducing the bureaucracy here makes sense. There are 36,000 advertising rights subject to business rates.  Each of these sites is valued individually, invoiced individually, paid individually, and checked individually.

The majority of these sites represent bus shelters, other items of social infrastructure provided under contracts with councils or other public bodies and public telephones.  However, these social infrastructure sites are low value, representing only a quarter of the total business rates revenue generated by advertising rights.

Administering business rates on social infrastructure sites is also incredibly inefficient; with administration accounting for over 50,000 hours of work for the Valuation Office Authority, councils, and operators each year.

This is why the industry is seeking an exemption from business rates in respect of advertising rights on social infrastructure sites like bus shelters. Doing this will free up valuable time for council officers to work on the issues that really matter to their communities, give business the certainty needed to invest in vital social infrastructure, and help local authorities deliver their sustainability ambitions by providing operators the certainty to install long-term green infrastructure.

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