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High street retailers unite to call for action on business rates to protect physical stores

More than 50 high street retailers in the UK have signed a letter to Chancellor Sajid Javid, expressing their concern over business rate and the pressure they put on operators of physical stores.

The letter, coordinated by the British Retail Consortium (BRC), calls for government action to fix the ‘broken’ business rates system. It has been signed by the CEOs of companies including Asda, B&Q, Greggs, River Island, Specsavers, and Marks & Spencer, and is supported by the Association of Convenience Stores. It states that retail is the largest private sector employer in the UK and accounts for 5 per cent of the UK economy – yet contributes 10 per cent of all business taxes and 25 per cent of business rates.

Retailers with physical stores face a far higher burden of rates and taxes than online retailers.

Four ‘fixes’ are called for in the letter:

  • A freeze in the business rates multiplier
  • Correction of transitional relief, which forces many retailers to overpay business rates
  • The introduction of ‘Improvement Relief’ for retailers
  • Better resourcing the Valuation Office Agency to help it do its job

“These four fixes would be an important step to reform the broken business rates system which holds back investment, threatens jobs and harms our high streets. The new Government has an opportunity to unlock the full potential of retail in the UK, and the Prime Minister’s economic package provides a means to do so,” says BRC chief executive Helen Dickinson OBE.

“The fact that over fifty retail CEOs have come together on this issue should send a powerful message to Government. Retail accounts for 5% of the economy yet pays 25% of all business rates – this disparity is damaging our high streets and harming the communities they support.”

Retailers have been quick to support the BRC’s call for reforms.

“Our hope is that this new Government has both the foresight and the ambition to undertake a drastic review of Britain’s out-dated business rates tax system. A good start in ensuring we have a tax regime fit for the 21st century would be ensuring that any proposed economic package this autumn contains the common-sense measures proposed by the BRC in its letter to the Chancellor today,” says Harrods managing director Michael Ward.

“We fear for the future of our market towns as many shops now have rates bills which bear no relation to the reality of trade in those locations. If our local shopping areas decline then the old, the poor and country dwellers will be hugely disadvantaged as they have less access to the internet and also to city centre and out of town shopping centres. Government must decide whether they want smaller places to thrive or to become ghost towns,” says F Hinds director Andrew Hinds.

“Business rates are an outdated Victorian taxation system that have little relevance to our modern multi-channel retail economy. Fundamental reform of the system is the only way we will stem the decline of high street communities up and down the country,” says Iceland Foods joint managing director Richard Walker.

“We welcome the BRC proposals which offer short term solutions that can introduced quickly and will have immediate benefits to the struggling retail sector.  In particular, the removal of downwards transition will allow all retail businesses to pay a tax which more accurately reflects the value of their properties.  The burden that rates places on all High Street businesses not only stifles growth but is a major contributor to the closure of stores and the resulting decline in towns across the country,” says River Island chairman Clive Lewis.