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B&Q and Screwfix Among Retailers Demanding Chancellor Fix Business Taxation

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Over fifty major retailers have come together to demand the Government takes action to fix the broken business rates system. In a letter to the new Chancellor, Sajid Javid, retailers called on the Government to put business rates at heart of the promised new economic package. The letter, coordinated by the British Retail Consortium, has been signed by major retailers including the CEOs of supermarkets, food-to-go, fashion, homeware, and department store retailers. 

Retail remains the largest private-sector employer in the UK, employing approximately three million people. The industry accounts for 5% of the UK economy, yet is burdened with 10% of all business taxes, and 25% of business rates.

The letter asks for four fixes that would address many of the challenges posed by business rates:

  • A freeze in the business rates multiplier;
  • Fixing transitional relief, which currently forces many retailers to pay more than they should;
  • Introducing an ‘Improvement Relief’ for ratepayers;
  • Ensuring that the Valuation Office Agency is fully resourced to do its job.

The letter notes that implementation of these four recommendations “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.”

Helen Dickinson OBE, Chief Executive of the British Retail Consortium, said:

“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. 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 fifty 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 letter comes the day after BRC-Springboard data showed that UK Vacancy figures had risen to 10.3%, the highest since January 2015. It also comes shortly after the BRC-KPMG Retail Sales Monitor showed the 12-month average sales figures dropped to their lowest level on record, at 0.5%.

James Lowman, Chief Executive, Association of Convenience Stores:

"Retailers investing in their businesses need support and incentives, not to be hit with increased business rates bills. The business rates system needs fundamental change to address this perverse incentive. 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." 

Michael Ward, Managing Director, Harrods:

“Our hope is that this new Government has both the foresight and the ambition to undertake a drastic review of Britain’s out-dated business rates tax system. A good start in ensuring we have a tax regime fit for the 21st century would be ensuring that any proposed economic package this Autumn contains the common-sense measures proposed by the BRC in its letter to the Chancellor today.”

Andrew Hinds, Director, F Hinds:

“We fear for the future of our market towns as many shops now have rates bills which bear no relation to the reality of trade in those locations.  If our local shopping areas decline then the old, the poor and country dwellers will be hugely disadvantaged as they have less access to the internet and also to city centre and out of town shopping centres.  Government must decide whether they want smaller places to thrive or to become ghost towns.” 

Richard Walker, Joint Managing Director, Iceland Foods:

“Business rates are an outdated Victorian taxation system that have little relevance to our modern multi-channel retail economy. Fundamental reform of the system is the only way we will stem the decline of high street communities up and down the country."

Clive Lewis, Chairman of River Island:

“We welcome the BRC proposals which offer short term solutions that can introduced quickly and will have immediate benefits to the struggling retail sector.  In particular, the removal of downwards transition will allow all retail businesses to pay a tax which more accurately reflects the value of their properties.  The burden that rates places on all High Street businesses not only stifles growth but is a major contributor to the closure of stores and the resulting decline in towns across the country.” 

Signatures include: British Retail Consortium, Ann Summers, ASDA, B&Q, BIRA, Booksellers Association, Boots UK, Card Factory, Carpetright, Central England Co-operative, Company Shop Group, Costcutter, Debenhams, Deichmann Shoes, DFS, Dixons Carphone, Dreams, F Hinds, Fenwick, Greggs, Harrods, Henderson Group, Iceland, John Lewis Partnership, Marks & Spencer, McKesson UK, New Look, Pret A Manger, Primark, Retra, Rigby & Peller, River Island, Sainsbury’s, Savers Health Home & beauty, Scottish Midland Co-operative Society, Screwfix, Spar UK, Specsavers, Steinhoff UK, Superdrug Stores, The Association of Convenience Stores, The Body Shop International, The Co-operative Group, The Hamleys Group, The Original Factory Shop, The Paint Shed, The Perfume Shop, Whittard of Chelsea, WH Smith, Wm Morrison Supermarkets, Well Pharmacy.

Source : Insight DIY and BRC

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13 August 2019

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