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Retail leaders have called on MPs to reform the business rates system which they say is “strangling the high street”.
The British Retail Consortium has calculated that business rates will rise another £200m over the next year as changes to the levy are introduced from today.
The organisation’s chief executive, Helen Dickinson, has called on the government to reform the “broken system” amid a pressure on the high street from online retailers.
The retail industry has seen a decline of 48,000 jobs between 2017 and 2018, even though the economy has seen the creation of 415,000 jobs as a whole, the organisation said.
Calls to reform business rates come as the treasury select committee conducts an inquiry into the business rates regime.
The Financial Times has also reported that online retailers, which have been criticised for paying much smaller business rates that high street competitors, are likely to face higher bills from 2021 as a result of big increases in rents for the distribution centres that are key to their operations.
Business rates generate almost £30bn for the Treasury each year, with £7bn of this coming from retailers.
“Retail is in the midst of a transformation as new technologies and changing consumer behaviour impact the way we shop,” commented Dickinson.
“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.
“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.
“While government fiddles at the edges, retail suffers and consumers pay the price. 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.”
Morning update
Café bar chain Loungers has announced its intention to float on AIM index, with an expected value of around £250m.
The company, which has 146 Loungers and Cosy Club outlets was founded in 2002 by Alex Reilley, Jake Bishop and Dave Reid, and is backed by PE giant Lion Capital.
It has 122 Lounge café bars and 24 sites under the slightly more upmarket Cosy Club brand, which targets larger market towns and city centres.
The restaurant group said it saw 6.4% like-for-like sales growth in 24 weeks to 7 October 2018, with 6% like-for-like growth in the full-year 2018.
Cash from the listing will be used to pay off debts and fund the company’s rapid expansion, with a target of opening 25 new sites each year.
“It has long been the ambition of the founders and myself that Loungers becomes a listed entity,” commented Nick Collins, chief executive of Loungers.
“The listing will allow us to broaden the employee shareholder base and provide us with an appropriate capital structure to pursue our future growth ambitions.
“We have a growing business and clear expansion strategy to continue to rollout 25 new sites per year supported by a strong pipeline of sites and led by an experienced and committed management team.
“We believe our track record speaks for itself and look forward to the opportunity which lies ahead to deliver significant value for all shareholders.”
The weakness in the pound is continuing to bolster the FTSE 100, which has jumped another 0.7% to 7,330pts.
The early risers include Purecircle limited (PURE), up 4% to 257p, Treatt (TET), up. 2.2% to 413p, and Majestic (WINE), up 1.7% to 226.7p.
The early fallers included Stock Spirit Group (STCK), down 3.3% to 222.5p, Premier Foods (PFD), down 2.3% to 35.6p, and Associated British Foods (ABF), down 0.7% to 2,422p.
This week in the city
Brexit will continue to dominate the news pages for the next week, as business owners continue to wait for greater clarity regarding the UK’s exit scenario.
While plenty remains up for debate in Parliament, the London Stock Exchange looks set to be fairly quiet this week, with very few announcements, in grocery and wider industry.
On Tuesday, palm oil suppler MP Evans will update investors regarding its full-year results, as pressure remains regarding improving sustainability in the sector.
Wednesday will see convenience retailer McColl’s (MCLS) have its AGM, as it looks to rebound from a recent slump in value.
In the US, Walgreens Boots Alliance will provide an interim sales update for 2019 on Wednesday as well.
Thursday and Friday are both clear with regards to company updates in the sector.
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