News | Published August 14 2019

Major retailers call on chancellor to reform business rates

Over 50 retail firms, including Asda and Boots, have asked chancellor Sajid Javid to reform what they call the “broken business rates system”, with taxes having risen 50 per cent since the 1990s.

An open letter written to Javid, co-ordinated by the British Retail Consortium, says that the tax rises have led to some retailers closing down and going out of business.

The letter highlights that five per cent of the economy is provided for by the retail sector but it pays out a quarter of all business rates, with the disparity causing turmoil on the High Street and therefore “harming the communities” that they help to support.

According to BRC statistics, the retail sector provides employment for three million people in the UK, making it the biggest private sector employer in the country.

A £3.6 billion pledge to “support High Streets and town centres” was made by the Treasury in July, with the number of vacant shop units at a four-and-a-half year high.

James Lowman, chief executive of the Association of Convenience Stores, called the business rates system “outdated” in an interview on BBC’s Today programme.

He said: "It's a really outdated system, it's designed for a time when there only was physical retail, and people doing business from physical premises. That has been changing for a long time.

"The biggest thing is the way it's a disincentive to investment. If you take a retail shop and you improve it, you put in things that are not just important to the business, but are probably important to that community, like CCTV, solar panels perhaps, bringing in a cash machine, that sees your business rates bills significantly increase.

"Now surely it should be the other way round. We should be encouraging and incentivising investment, rather than penalising businesses for it.”

The British Retail Consortium wants to avoid an overall tax raise, but has urged businesses in London and the South East to pay out more in business rates to ease pressure on those firms in less wealthy areas in the run-up to Brexit.

The letter to Javid reads: "The likelihood of a no-deal Brexit appears to be increasing, which we believe would place a considerable strain on retailers in the UK.

“In this context, the prime minister's intention to pursue an economic package to boost business and investment in the UK is crucially important; we strongly believe that reform of the broken business rates system should be front and centre of that package.”

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Authored by

Scott Challinor
Business Editor
August 14 2019

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