Retailers have warned the chancellor’s decision to dodge a full review of business rates will result in an “unnecessary loss” of jobs and shops – saying the budget’s temporary 50% cut for small businesses is not enough to help the high street.
Retailers said the one-year cut, which is capped at £110,000 per business, would only benefit small retailers, bars and restaurants and pubs, because larger shops such as a single department store can pay more than £1m a year in rates.
The cancellation of next year’s planned rise in business rates in Rishi Sunak’s budget on Wednesday, which would have added just over £1bn to bills, according to analysts at real estate adviser Altus, a quarter of which would have been paid by retailers, was welcomed but not seen as a long-term fix.
There was, meanwhile, disappointment that the budget documents said the government would only “explore the arguments for and against” an online sales tax that could fund a reduction in business rates for high street retailers. The latest delay comes despite a promise from the government for the resolution of a fundamental review of the business rates system in the autumn budget.
A pledge to exempt investment in green innovations such as solar panels or heat pumps from business rates and a one-year relief on higher bills linked to building improvements, announced by the chancellor on Wednesday, was welcomed but not seen as a major change.
Helen Dickinson, the chief executive of the British Retail Consortium, which represents most major retailers, said: “With no reduction in the [rates] burden, this will lead to the unnecessary loss of shops and jobs and fails to incentivise investment in all parts of the country. This is bad news for every member of the public who wants a vibrant high street in their local community, with retail at its heart.”
Vivienne King, the chair of the Shopkeepers’ Campaign, said Sunak had “betrayed the high street” by failing to permanently reduce the business rates burden with a fundamental review of the property tax system, which is seen to unfairly target retailers and hospitality businesses.
“The pledge on more frequent revaluations is simply a re-announcement of what [then chancellor] Philip Hammond promised in 2017. We are deeply disappointed that there is no commitment to annual revaluations so that tax bills reflect the market property values,” she said.
King’s comments were backed by retailers including Gary Grant, the founder of The Entertainer toyshop chain, who said the short-term discounts did not change the fact that the business rates system was “completely broken and not fit for purpose”. He said online specialists currently benefited form a “massive rates advantage”.
Scott Parsons, the UK boss of shopping mall owner Unibail-Rodamco-Westfield, agreed the chancellor’s pledges were not enough to significantly help the retail industry.
Parsons, who oversees the two Westfield centres in Shepherd’s Bush, west London, and Stratford, east London, said: “London in particular risks losing its crown as one of the retail capitals of Europe, as international businesses are put off by the prospect of having to pay on average 10 times higher occupancy taxes than they would in any other European country – that’s not 50% more, or even twice as much, but 10 times higher than in other markets.”
Steep business rates have been partly blamed for mass closures on British high streets, where store owners are hobbled by paying higher taxes than online specialists such as Amazon, Boohoo and Asos.
Labour last month pledged to scrap business rates and undertake the “biggest overhaul of business taxation in a generation” if it is voted in at the next election.