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Business rate burden blocking retail tech investment, says BRC

UK retailers’ necessary transformation efforts are partly being held up by the burden of business rates, according to British Retail Consortium (BRC) CEO Helen Dickinson.

In a strongly worded statement directed at the UK government, Dickinson underlined the wide changes retail is going through and how new technologies and changing consumer behaviour are impacting the way people shop.

“The investment needed for this reinvention is being held back by a rising tide of public policy costs, with business rates the biggest among these,” she explained.

“Retail accounts for 5% of the economy, yet pays 10% of all business taxes and a staggering 25% of business rates. This is simply not sustainable; the raft of shop closures and job losses are testament to that.”

The business rates multiplier has risen to 50.4p in the pound, with the BRC saying retailers in England, Scotland and Wales are now shouldering an additional £200 million of taxes.

In a submission made to the Treasury Select Committee today, the BRC sets out a framework to fix what it describes a broken business tax system. It calls for the government to set up a fully Independent Review of Business Taxation, looking at how taxes such as VAT, corporation tax, business rates, payroll taxes, and taxes not yet used in the UK, such as land value taxation, can meet 21st century criteria.

Pending this, the trade body wants an immediate freeze in the multiplier pending further reforms, saying that the government should guarantee it will not rise beyond its current 2019-20 rate, and take action to reduce it from that level.

One other measure suggested is for the Treasury to consider combining the revenue from corporation tax and business rates as a sole 'business tax', and use the forecast increase in revenue in the former to offset forecast increases in the latter.

“While government fiddles at the edges, retail suffers and consumers pay the price,” said Dickinson.

“The Treasury Select Committee Inquiry comes at a critical moment for the retail industry. If the committee can seize the opportunity to find a way to address the madness of a system which is strangling our high streets, they can protect shops and jobs and put British retail on the right trajectory for the future.”

The BRC said that since business rates  started in 1990 they have risen by 45%, from 38.4p to 50.4p in the pound, meaning shops will now be paying over half of their rateable value again in business rates before they have even made a penny in sales.

It said the current system is contributing to the rising number of store closures and discouraging new businesses from taking over empty shops, with retail experiencing a drop of 48,000 jobs between 2017 and 2018 even though Office for National Statistics figures show the economy as a whole added 415,000 new jobs over the same period.