Retail bosses have urged Boris Johnson and Chancellor Sajid Javid to reform the business rates system as a way of cushioning the blow of a no-deal Brexit.
CEOs of major supermarkets are among more than 50 retailers to have written to Javid, ahead of an expected emergency budget in October.
The letter, coordinated by the British Retail Consortium and backed by retailers including Asda, Sainsbury’s and the Co-op, says it is unfair that an industry accounting for 5% of the UK economy is burdened with 10% of all business taxes, and 25% of business rates.
The letter proposes freezing the business rates multiplier as one way of incentivising economic growth. Further demands include the fixing of transitional relief, which it claims forces many retailers to pay more than they should, the introduction of an ‘Improvement Relief’ for ratepayers, and increased staffing at the Valuation Office Agency (VOA).
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“The likelihood of a no-deal Brexit appears to be increasing, which we believe would place a considerable strain on retailers in the UK,” says the letter.
“In this context, the prime minister’s intention to pursue an economic package to boost business and investment in the UK is crucially important; we strongly believe that reform of the broken business rates system should be front and centre of that package.”
The measures 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”, added the retail bosses.
The plea comes the day after BRC-Springboard data showed that UK shop vacancy rates in July had risen to 10.3%, the highest since January 2015. It also comes shortly after the BRC-KPMG Retail Sales Monitor showed 12-month average sales figures dropped to their lowest level on record, at 0.5%4.
“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,” said BRC chief executive Helen Dickinson.
“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.
“The fact that over 50 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.”
By taking swift action of these recommendations, the Chancellor “would send a clear message that the new government understands the needs of local communities and that it will act decisively to support the jobs of the country’s largest employer”.
“The business rates system needs fundamental change to address this perverse incentive,” added ACS chief executive James Lowman.
“There is much more the Government can do now to help small businesses, and their first priority should be extending rate relief for more businesses, and for beyond the next financial year.”
The letter comes a day after the Co-op confirmed it had swung its weight behind Tesco’s plans for an online sales tax, as pressure grows on Javid to level the playing field between bricks and internet and online companies.
Tesco’s plans for an online tax have split retailers, with the BRC claiming it would hit the growth prospects of retailers themselves, with online being one of the key areas for expansion.
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