Tracy West finds out how a small hole in the road can lead to a big hole in your profits

Dean Holborn is angry, and with good reason. He lost £85,000-worth of trade from his Holborn's store in Redhill, Surrey, because a gas company was digging up the road - and he didn't receive a single penny of compensation.
The roadworks in question began in April 2006, but unfortunately Dean's story starts 10 years or so before then. He explains: "We had problems with roadworks done by British Gas years ago. Our story was featured in Convenience Store at the time, and the ACS used us as an example in the House of Lords. We went to the small claims court and our case was defended by a barrister, but it didn't get us anywhere."
Fast-forward to 2006 and Dean got notification from SGN (Southern Gas Network) that his road was going to be closed for 14 weeks from April to August. "It couldn't have come at a worse time," says Dean. "It was World Cup year and football tournaments are always good news for
c-stores. Also it was a really hot summer but our store was in the middle of no man's land. All access was shut off and our customers went elsewhere."
While Dean didn't have the trade, of course he still had the overheads, including staff costs: "With hindsight I probably should have laid off some of my staff but that's easy to say now."
However, things did look up slightly when Dean realised that a compensation scheme for roadworks was in place; but upon closer examination he found that he had to lose £120,000 to qualify. "The figures are worked out on the net profit from your gross annual turnover. My losses amounted to £85,000 and although it was a massive amount to me, it wasn't enough."
Dean didn't let it lie. He sought legal advice: "As soon as my case was put into the hands of the loss adjuster I thought it was good news, but it got us nowhere," he says.
He is bitter, and with good reason: "The gas work was an £800,000 project so for them to give me some kind of compensation would have been a drop in the ocean. My business could have gone under and I suffered 14 weeks of horrendous stress. You'd have thought that with a project that size they could have given me something - £5,000 or £10,000 would have been better than nothing. What gets me is that they directly affected my livelihood; they were legally allowed to trample all over my business."
The change was immediate the day the road was re-opened: "It came alive again," Dean says. "Old customers came back - they even apologised for not using us." Luckily Dean's business has recovered and his turnover is now back to its pre-roadworks level.
Unfortunately Dean is not the only c-store retailer to have suffered from roadworks. Parminder Rai of Willesborough Post Office in Ashford, Kent, says roadworks nearly ruined him: "They closed one end of our road and only allowed access to people living here. That was not good for us because we rely on passing trade. The road was closed for three months and we lost trade for good during that time. People are creatures of habit; they stopped coming to us and have never come back."
Parminder says he, like Dean, applied for compensation but was told he had not lost enough money to qualify.
Meanwhile, Greg Phillips of Poynton Post Office near Macclesfield, Cheshire, says roadworks ripped the heart out of his village. "They lasted for three months and some days our takings were down by 50%. We rely a lot on passing trade and people didn't have time to sit in traffic so they went elsewhere. It really was like a ghost town."
So badly affected were traders that an action group was formed and the local paper, the Macclesfield Express, took up their cause. The roadworks were at the behest of the gas company - Gas Alliance - which was replacing old
iron pipes.
His hopes of compensation were dashed in a letter from Gas Alliance. "We had been led to believe that we were entitled to compensation but there was a clause saying our losses had to be a certain percentage of our business. As ours were just a few thousand pounds we didn't qualify. There's a Netto in the village and I bet they qualified. You'd think people could do more to help small businesses; we could have been paid something as a goodwill gesture."
And Jeeta Bhadal's trade at his Londis/Woodhouse Street Post Office in Leeds dropped when resurfacing works closed his road for just one week. "We were notified a couple of weeks before the work began but we hadn't realised that they were closing the whole street and blocking all access. As a result our sales dropped by 15%. To make matters worse it happened at the beginning of a month - a time when our post office is usually heaving with people buying their road tax. Usually there are queues in the shop but I had staff standing around with nothing to do."
However, Jeeta was very quick to take matters into his own hands:
"The first day the work started I spoke to the site manager and explained how the disruption was going to affect my business. He said they'd get some signs put up saying the shop was open as normal. This didn't happen so I made my own. Next to every single sign saying the road was closed I put up a sign saying the shop was still open. That's the reason why I lost only 15% of my trade."
Jeeta's road was closed between 8am and 5pm for a week. "Fortunately people did come back after that but I had to advertise to encourage them."
He reckons the works took longer than necessary: "They took the top layer off the road one day and weren't seen after that for two days. I'm sure it could have been done quicker."
Jeeta says a proactive approach is always best: "You do need to make a fuss, but in the politest way possible. Talk to the site manager about how it's going to affect your business. Maybe you can have a meeting with the council beforehand and get them to make some signs for you."
And he has a word of worning. "If you put your own signs up, make sure you remove them once the work has finished or the council will probably fine you."
Applying for compensation takes time and money. Jeeta says he didn't have time to apply because a couple of members of his family were away and he was too busy running his shop. Greg did spend time on his claim and paid his accountant to help him, but in the end he gave up. "It's difficult to find the time; I'm busy enough as it is. I think that's what some of these people bank on. There were other traders in the village who talked about applying for compensation but never got round to it either."
Matthew Knowles, spokesman for the Federation of Small Businesses, advises retailers to get onto their local authority straight away to make them aware of the effect of any roadworks. "Sometimes they can tailor work around businesses to reduce the impact. Of course businesses can benefit from improvements to roads but they have to survive the roadworks in the first place. It's no good the road re-opening if the shop has had to close."
He says it's frustrating that the compensation structures seem to be geared to large businesses. "Smaller traders aren't deemed to be losing enough money to be worth compensating, but it's these small businesses that should be the primary focus of compensation."

Your rights
C-Store's own agony aunt, Jac Roper, has had many complaints over the years from retailers suffering loss of trade from roadworks. She says: "If the electricity company digs up the road there is no statutory requirement for compensation, although there is if it's water, sewerage or gas. Getting them to cough up is, of course, another matter.
"Ofwat, the water services regulatory authority, says policy varies from company to company and retailers need to contact whichever water supplier is carrying out the work. The Compensation for Business Disruption Water Industry Act 1991 provides the possibility for businesses to claim compensation. But it's a vaguely worded Act, open to interpretation.
"Then there's the Gas (Street Works - Compensation of Small Businesses) Regulations, but this document has unfair criteria in that it bases your entitlement to qualify for compensation on your profits as a percentage of your annual turnover. Because annual turnover is often high in
c-stores, but profit margins can be relatively low by comparison, such businesses fail to reach the percentage required to qualify for compensation."
Jac says that if it's an electricity company causing the problem then all you can do is apply for a reduction in your business rates. "Local councils have a time frame on this which, I believe, is something like six weeks disruption before they will reduce anything."
A spokeswoman for the Valuation Office Agency (VOA) says: "The VOA has a statutory duty to assess the rateable value of all non-domestic properties in England and Wales. The basis of the assessment is open market rental value at a fixed point in time. For any material change of circumstances - for example, a road closure - to affect a rateable value, it must be shown that its severity and duration would lead to a reduction in rent. A reduction in rateable value would be an option only if there was evidence that the works had affected rental values in the area."
Jac advises that the one thing retailers can't do is 'fight' any works, because they are deemed always to be for the local good in the long run.
"There is no compensation for works carried out by the local council. The council should, however, give notice to local businesses of any planned roadworks. Retailers should always discuss proposed works with the council to ensure that the timing is reasonable (ie not the week before Christmas). If the council is unwilling to co-operate, retailers should consider lobbying their MP. Obviously, where possible, they should take photos of any damage, mess or havoc caused, which can be used as evidence in any future negotiations.
"What retailers have to remember is that if they are suffering from roadworks, other local businesses will be too, although not necessarily to the same extent. It's a good idea to get together and publicise the problem, and seek official signage saying that the shops are still open. Retailers could also ask for some help when the works are finished. Some councils have a fund for things like
hanging baskets, a new bench, or security cameras; anything that signals to people, 'we're back and we're better'."

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