Ahead of the budget at the end of this month, the Chief Executives of more than 70 leading retailers in the UK have written to the Chancellor, Rachel Reeves, stating that “now is the time to level the playing field between industries”.
In an open letter coordinated by the British Retail Consortium (BRC), the heads of chains such as Tesco, Aldi, M&S, Ikea, and Costa have called on the government to introduce a Retail Rates Corrector as part of their commitment to reforming the business rates system.
The Retail Rates Corrector – a 20% downward adjustment in business rates paid on retail properties – aims to redress the imbalance that sees the retail industry pay 7.4% of all business taxes (£33bn), a share 1.5 times greater than its share of the overall economy (5% GDP). The BRC noted that this tax burden holds back investment, directly affecting the 3 million people employed by the industry and the 2.7m additional people employed within the supply chain.
The UK has been losing shops at a rate of over 1,000 a year, and research suggests that without action, a further 17,000 shops could close over the next decade. The Retail Rates Corrector aims to stem this tide of shop closures and unlock new investment in jobs, shops and communities.
Analysis shows that the retail and hospitality pay the highest proportions of their pre-tax profits in taxes compared to any of the other main business sectors. Of retail’s £33bn total tax bill, one-fifth is made up of business rates – the highest of all business sectors.
In their letter to the Chancellor, the 71 CEOs covering groceries, fashion, furniture, electronics and more, said: “We believe now is the time to level the playing field between industries with a retail adjustment to rates as this is the best way to achieve this manifesto commitment. We are writing to ask you to use the Autumn Budget to apply a Retail Rates Corrector, a 20% reduction to rates bills for retail properties of all sizes in all locations”.
In the party’s pre-election manifesto, Labour pledged to replace the business rates system in England with a fairer regime, saying the current arrangement disincentivised investment, created uncertainty and placed an “undue burden on our high streets”. However, it has yet to outline what that new system will look like.
Helen Dickinson, Chief Executive of the BRC, commented: “Retail has been the golden goose, generating tax revenues far beyond the industry’s size, but the current situation is not sustainable. The government should act to rebalance the system and ensure all industries are paying their fair share. This in turn would drive increased retail investment in people, places and communities. The Budget is the perfect opportunity to lay the groundwork for local investment that delivers for retail’s customers, delivers for its employees, and delivers for the economy.”
NAM Implications:
- Pragmatists will pass on breath-holding…
- In practice, given the situation as is, the big will get bigger.
- This means that small and medium-sized players will need the most urgent help.
