Without rates reform, four in five retailers will see store closures
It has been reported that 83 per cent of UK retailers believe their shops will close if the business rates burden is not reduced, while many others say this is an extremely important ongoing issue.
This is according to a new report published by the British Retail Consortium (BRC), which highlights the need for the Government to take immediate action to reduce the burden placed on retailers by business rates.
This would help to “unlock the industry’s potential to support the economic recovery from the pandemic, ensuring that retail remains a provider of quality jobs and an important contributor to tax revenues for years to come”.
Key findings from the survey include:
- 83 per cent of retailers say it is ‘likely’, ‘very likely’ or ‘certain’ that they will close shops if the business rates burden is not reduced as a result of the Fundamental Review’;
- 85 per cent of retailers say that business rates is an ‘extremely’ or ‘very important’ issue for their businesses when opening or closing stores;
- In two-thirds of store closures in the past two years, business rates had a material impact in the decision-making process;
- 25 per cent of stores paid more in business rates than in rents.
The BRC’s report, “Retail, Rates and Recovery: How business rates reform can maximise retail’s role in levelling up”, is based on a survey of leading retailers.
Retail accounts for over three million jobs spread across the UK and is responsible for over £400bn in consumer spending a year. The survey of retailers shows that unless business rates barriers are addressed, the Government will miss a key opportunity in supporting their ambitious levelling agenda.
The report makes a number of essential recommendations, including:
- Cutting the multiplier to its original rate of 35 pence in the pound;
- Fixing the system of transitional relief, which cost retailers over £500m between 2017 and 2020;
- Introducing an ‘Improvement Relief’ to ensure that rates bills do not rise immediately as a result of investment in a property;
- Reforming the Valuation Office Agency to ensure accurate valuations and faster processing of appeals.
Helen Dickinson, Chief Executive of the BRC, said the report underscores the urgency of fixing the broken business rates system, which currently holds back new jobs and investment.
“With one in seven shops currently shuttered, it is essential that action is taken, or else it will be our local communities and high streets which suffer the consequences.
“Furthermore, Government should introduce an improvement relief to prevent stores being immediately punished for investment into their property. At a time when the Green agenda is so important, it is madness that business rates should rise for a firm that adds solar panels to their property.”
The Government announced a Fundamental Review into business rates in 2020, which will report back this autumn. The stated aims of the review include “reduc[ing] the overall [rates] burden on businesses”.