Spring Budget 2024: “The last thing we need is an above-inflation increase in business rates”

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The bosses of five leading retail trade bodies have written to the chancellor ahead of this week’s Spring Budget, urging him to align April’s business rates rise with inflation forecasts. At present the impending increase is linked to the previous September’s CPI, meaning retailers who aren’t eligible for the 75 per cent relief could be saddled with a 6.7 per cent rise.

The letter, signed by Bira’s Andrew Goodacre and the British Retail Consortium’s Helen Dickinson, asks the chancellor to instead use the Bank of England’s Q2 forecast for inflation, which is currently 2.0 per cent:

‘April’s rates rise should be based on April 2024 CPI, rather than the level from seven months prior, when global cost pressures were still keeping inflation high. This would keep our business rates contributions in line with current changing prices, rather than introducing an inflationary rise. It would support our industries as they seek to drive greater investment in villages, towns and cities all over the country.’

Business rates remain one of the biggest burdens on bricks-and-mortar retail. The tax was introduced in 1990 at a rate of £0.35 in the pound. Yet it has since swelled to £0.51.2 (or £0.49.9 for small businesses) – making the UK the most expensive place in Europe for such property taxes.

During November’s Autumn Statement, the chancellor announced that eligible ratepayers will receive 75 per cent relief on their business rates bills for the year 2024/25 up to a maximum cash cap of £110,000.

However, business rates are still said to be a key factor behind the ‘the loss of over 26,000 shops, pubs and brewers and hospitality and leisure venues in the last five years.’

The other trade bodies behind the letter include Jame Lowman of the Association of Convenience Stores, Emma McClarkin OBE from the British Beer and Pub Asssociation and Kate Nicholls from UK Hospitality. Together they represent businesses in every part of the UK, employing 6.5 million people and investing over £25 billion annually across the country.

Helen Dickinson, chief executive of the British Retail Consortium, comments: “April’s rates rise will be more than three times the expected inflation at that time. This means above-inflation cost increases for businesses, which will put significant upwards pressure on prices, jeopardising the current success in bringing down inflation. The government needs to fix this anomaly and make sure April inflation is the determinant of April’s rates rise.

“With retail on the line for an additional £400m in rates, it is inevitable that there will be renewed pressure on retail prices, as well as blocking much new investment in our town and city centres. It is essential that the chancellor uses the Spring Budget to make this change and give our local communities a fighting chance to thrive.”

Andrew Goodacre, CEO of the British Independent Retailers Association, adds: “The retail sector, especially the non-food sectors, are very fragile with weak sales and rising costs. The last thing we need in April is an increase in business rates higher than the current rate of inflation for those retailers who do not qualify for the retail discount.”

Jeremy Hunt, the chancellor of the exchequer, will present the Spring Budget 2024 to parliament on Wednesday 6 March.