Autumn Statement: Calls to extend rates relief for larger businesses
Industry figures have called on the Chancellor Jeremy Hunt to extend business rates relief to medium-sized and larger businesses following the Autumn Statement.
In his address to Parliament, Hunt announced that the government will freeze the small business multiplier for a further year.
He added that the 75% discount on rates (up to £110,000 per year) for retail, hospitality, and leisure businesses will also be extended.
The chancellor said the extension will save the average independent shop and pub respectively over £20,000 and £12,800 next year.
However John Webber, head of business rates at Colliers, said a lack of support for medium-size and larger businesses will be a “massive hit” to the high street:
“The chancellor’s failure to support those retailers and hospitality companies with multiple stores or outlets, will lead to a hardship and do nothing to stem the trail of bankruptcies we have seen from such chains in recent years from Toys r Us and Carluccio to most recently Wilko. Last year 67,000 retail workers lost their jobs and 55,000 retail stores shut shop. The lack of support is astounding.
“It’s pointless worrying about Capital Allowance benefits on empty shops”
David Parker, head of rating at Savills, said the renewal was “welcome news”, but also stressed that the relief cap of £110,000 per business means most medium-to-large businesses will see little benefit:
“The financial pressures faced in the retail, leisure and hospitality sectors are not unique to small operators. Larger venues and portfolios, as well as ancillary businesses supplying those sectors, are also impacted, yet the relief doesn’t extend to them. As the sectors as a whole are impacted by these ongoing financial pressures, extending the relief to larger operators and supporting businesses would avoid further casualties and ease the pressure on the wider participants in these markets.”
Their views were echoed by Vivienne King, chair of the Shopkeeper’s Campaign, who said: “In the current economic climate, raising the standard multiplier by 6.7 percent should never even have even been considered. Business rates bills are already far too high, and they are now at their highest ever level. The Conservatives, who promised to reduce them for retail in 2019, have fundamentally broken their promise.
“While I am pleased to see the chancellor extend the retail, hospitality and leisure relief for one more year, it is disappointing to see that the cap has not been extended to some support of the larger retailers that provide essential products and services on our high streets. This relief is an acknowledgement that business rates are too high and capping it at £110,000 means that retailers beyond the threshold are still having to pay rates in full.”
No budging from the chancellor on the ‘tourist tax’
As with last year’s Autumn Statement and the Spring Budget earlier this year, there was no word from the chancellor on the government’s stance towards tax-free shopping for foreign visitors.
The UK is missing out on a £1bn “Brexit boost” due to the so-called ‘tourist tax’ according to campaigners.
Kay Buxton, chief executive of Marble Arch London Business Improvement District, said: “Shopping accounts for 46% of all tourist spending, with 54% being spent on hotels, eating out, and visitor attractions so it is frustrating that the chancellor has again ignored widespread calls to reintroduce tax-free shopping for international visitors*.
“Independent research suggests that reintroducing tax-free shopping would have led to an extra £2.1bn being spent on shopping by overseas visitors, as well as £1bn on hotels, restaurants, and visitor attractions. The removal of tax-free shopping has damaged the international appeal of the UK for visitors, so this is another missed opportunity by the chancellor, which would have provided a much-welcomed boost for the UK visitor economy.”
*Figures from the Association of International Retail
Conservative MP Sir Geoffrey Clifton-Brown said earlier this year that London’s retail and hospitality businesses have been abandoned by tourists in favour of mainland European destinations.