More than 1,300 businesses from Staithes to Spurn Point with a rateable value of more than £12,000 have to pay a mandatory levy, equating to 1.5 per cent on their rates, to a private company, the Yorkshire Coast Business Improvement District (BID).
It follows a controversial ballot in 2018, which was passed by a margin of 217 in favour with 175 against, on a turnout of just above 29 per cent.
Scarborough and East Riding Councils - which collect the levy on behalf of the BID - voted in favour, deploying some 68 votes they had as a result of car parks and other assets they run, leading to accusations of unfairness.
The BID aims to raise £5m over five years to spend on projects that promote tourism and improve trade.
Two years of bills have gone out, but a total of £590,427 has yet to be collected. More than 800 of the business accounts, including 653 in Scarborough borough, still owe money for the 2020 to 2021 financial year.
East Riding Council has obtained court orders to recover money from 27 businesses owing £16,639 for the first year.
Scarborough Council director Nick Edwards said £448,154 was unpaid in the first two years despite reminders and they had been instructed by the BID to issue a summons to “each business that has not paid its share of the levy”, although a timeframe has not yet been agreed.
He said: “We realise the last 18 months have been extremely challenging for local businesses. If any business is struggling to pay due to financial hardship, they should contact our local taxation team for advice.”
The BID said they had taken steps to alleviate pressures on businesses as a result of the pandemic, including giving a 20 per cent discount for a year and deferring payments.
Scarborough subpostmaster Matthew Kay voted against the BID being set up and said he wouldn’t pay until “we have our day in court”.
He said: “The BID will argue the town benefits, everybody benefits. But we are a 15-minute walk from the beach. Tourism doesn’t affect us.”
Former Scarborough council leader Derek Bastiman said local businesses are not paying out of “sheer frustration” with the way the ballot was handled. And he claimed the council “won’t necessarily have an appetite” for legal action in the run up to North Yorkshire’s county and district councils being scrapped.
It comes after Scarborough MP Robert Goodwill raised concerns with Housing Secretary Robert Jenrick over Scarborough Council’s involvement in the ballot, including contacting supportive businesses in the run up to the poll. In a letter Mr Goodwill said there had been “much disquiet” about the way the ballot was run and there need to be clearer rules.
He said: “Some businesses are refusing to pay their levy and others such as for example funeral directors are rather perplexed as to why they should be paying into a tourism promotion fund, when their businesses do not benefit from that.”