Retailers rally in call for business rates reform

More than 50 major retailers including Harrods, Asda and Pret a Manger have teamed up to urge the government to reform the business rates system.

In a letter to Sajid Javid, the new chancellor, the retailers called for the issue of business rates to be put at the “heart” of the promised new economic package.

The letter, coordinated by the British Retail Consortium, was signed by the chief executives of supermarkets, food-to-go, fashion, homeware, and department store retailers.

It outlines four recommendations that would address many of the challenges posed by business rates:

A freeze in the business rates multiplier;
Fixing transitional relief, which currently forces many retailers to pay more than they should;
Introducing an ‘Improvement Relief’ for ratepayers;
Ensuring that the Valuation Office Agency is fully resourced to do its job.

The British Retail Consortium, which is leading the campaign, said that the industry accounts for 5% of the UK economy, but is burdened with 10% of all business taxes and 25% of business rates.

The letter notes that implementation of these four recommendations “could be undertaken quickly, would reduce regional disparities, remove barriers to the proper working of market forces, incentivise economic investment, and cut away at least some of the bureaucracy of the current system”.

Michael Ward, managing director of Harrods, said: “Our hope is that this new government has both the foresight and the ambition to undertake a drastic review of Britain’s outdated business rates tax system.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.”

Helen Dickinson OBE, chief executive of the BRC, said: “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.

Andrew Hinds, director of F Hinds, said: “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.”

Richard Walker, joint managing director of Iceland Foods, said: “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.”

Clive Lewis, chairman of River Island, said: “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.”

Retailers and industry bodies signing the petition include: