Retail gangs up on Treasury to demand business rates overhaul

Dozens of major retailers have clubbed together to demand an overhaul of business rates - blamed for contributing to the crisis facing the UK's high streets.

A total of 52 chains signed the letter to the government, in an effort coordinated by the British Retail Consortium (BRC), to urge reform in a number of key areas in next month's budget.

It follows several years of turmoil for the sector as growing costs from the likes of business rates, rents and minimum wage rules have combined with a slowdown in consumer spending.

The crisis has forced several big names to collapse while others - even Sir Philip Green's Topshop empire - have gone cap-in-hand to creditors to agree store closures and rent cuts.

BRC figures released in January pointed to almost 60,000 job losses in the industry during 2019.

The businesses behind the letter, which include Asda, B&Q, Greggs and Ann Summers, described the business rates system as "broken".

Rates bills, which apply across England and Wales, bring in around £40bn for the Treasury annually.

They are based on a formula which involves analysis by inspectors into rental values of all business premises.

The chains pointed to particular trouble from so-called transitional relief - a measure within the rates system that is supposed to help firms not be overburdened following a revaluation of the amount due.

Limits are in place to help those who are underpaying stagger the upwards transition to a higher bill, funded by overpayers easing the speed at which their lower bill is introduced.

The companies said transitional relief had seen the industry forced to subsidise others to the tune of £543m over the
last three years.

The letter also argues that companies outside London subsidised the city to the tune of £596m over the same period - despite consumer spending in the capital remaining relatively stable.

It said the "burden of business rates has become unsustainable for many retailers" and claimed that scrapping the downward phasing of rate would remove the harmful effects transitional relief has on retailers and businesses in the North of England.

Helen Dickinson, chief executive of the BRC, said: "The future of retail is an issue that matters to people everywhere - it employs three million people and serves the needs of the entire country.

"Yet transitional relief undermines both the industry as a whole, and many regions that it serves.

"Northern high streets effectively subsidise London banks, forcing a £600m transfer of wealth to the capital; this could be used to support investment in people and technology that would benefit all parts of the UK.

"Every year retail faces higher and higher business rates bills, holding back much needed investment in an industry that is transforming at a dramatic pace.

"Swift action at the upcoming Budget would show the Chancellor was serious about levelling up all parts of the UK and supporting a retail industry towards realising a brighter future."

A Treasury spokesman said: "We are committed to levelling up the country and want to see thriving high streets in every region. That's why we've committed to a fundamental review of business rates and are halving rates for small shops at
the Budget.

"Since 2016 we've cut business rates across the board, with reforms that will reduce their cost by £13bn over the next five years."