Most UK retailers (83 per cent) say they could collapse if business rates are not reduced, warns the British Retail Consortium (BRC). The findings, taken from its new Retail, Rates and Recovery report published this week, highlight the need for immediate action from the government.
A total of 85 per cent of businesses say that rates are a key issue for them while two thirds said the tax had a material impact in the decision of closing stores. Another 25 per cent say they pay more for business rates than rent.
The government announced a Fundamental Review into business rates in 2020, with the final report expected to be unveiled this autumn. Business rates were first introduced in 1990 and have risen by 47 per cent to 51.2 pence in the pound in 2020. Retail, which accounts for 5 per cent of the economy, pays 25 per cent of business rates with an approximate £8bn bill for retailers across the UK.
BCR recommends that rates are cut by 35 per cent and that the government fixes the transitional relief system, which cost retailers over £500m between 2017 and 2020. It is also calling for the government to introduce an Improvement Relief to ensure rates bills don’t rise immediately after property investment. Meanwhile, it wants a reform of the Valuation Office Agency to ensure accurate valuations and processing of appeals.
Shadow chancellor Rachel Reeves announced that a Labour government would immediately cut business rates before phasing it out completely.
Helen Dickinson, chief executive at the British Retail Consortium, comments: “Given the retail industry contributes almost £100bn to the economy (Gross Value Added) and employs over three million people, it has a vital role in both the UK’s economic recovery and the government’s levelling up agenda. This report underscores the urgency of fixing the broken business rates system, which currently hold back new jobs and investment. With one in seven shops currently shuttered, it is essential that action is taken, or else it will be our local communities and high streets which suffer the consequences.
“The government needs to bring the burden down and take action to ensure that the system reflects property market values more quickly. This should include a cut in the multiplier rate, returning it to its original rate of 35 per cent. Furthermore, Government should introduce an improvement relief to prevent stores being immediately punished for investment into their property. At a time when the Green agenda is so important, it is madness that business rates should rise for a firm that adds solar panels to their property.”
Pic by Markus Spiske on Unsplash