Retail sector ramps up pressure on Government ahead of Budget 2020

52 of the UK’s biggest retail chains have joined forces to demand that the UK government reviews its planned overhaul of business rates. The joint letter, which was sent to the government via the British Retail Consortium (BRC), claims that the upcoming reforms to business rates don’t go far enough to assist ailing retailers on the UK’s high streets.

The retail sector cites a perfect storm of reduced consumer spending, business rates and minimum wage commitments as the primary reason behind its struggles in recent years, with some of the biggest brands forced to undergo store closures. The BRC revealed last month that almost 60,000 retail jobs were lost in 2019 alone.

Within the letter, leading UK retailers, which include the likes of Greggs, Asda and B&Q, labelled the UK’s business rates system as “broken”. At the time of writing, business rates – which are applicable only in England and Wales – generate £40 billion for the Treasury coffers each year.

Business rates are calculated based on inspectors’ analysis of rental values of all available commercial properties. The letter cites problems with transitional relief, which was implemented with the intention of aiding retailers affected by a revaluation of their retail space.

Transitional relief helps those retailers that are deemed to be underpaying business rates following revaluations, giving them a chance to stagger their increased payments. This transition is funded by those who are found to be overpaying their business rates. However, this system is thought to have seen overpayers subsidise others as much as £543 million in the last three years. The letter argues that retailers outside the capital have subsidised London retailers by even more (£596 million) during the same period.

The letter states to the government that the “burden of business rates has become unsustainable for many retailers”. It recommends removing the downward phasing of rates would remove the need for expensive after-effects of transitional relief on retailers outside of London and the South East.

Helen Dickinson, chief executive, 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.”

In response to the letter, a spokesman for the Treasury reiterated that the government is “committed to levelling up the country” and foster “thriving high streets in every region”.

It added that cuts to business rates will reduce bills for retailers “by £13 billion over the next five years”.

The Budget 2020 is scheduled for Wednesday 11th March, with the newly appointed Chancellor of the Exchequer, Rishi Sunak due to outline the government’s fiscal policies for 2020/21.

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