Leading retailers call on Chancellor to freeze business rates hikes
A number of leading retailers have written to the Chancellor Jeremy Hunt calling for a freeze on the business rates multiplier at the upcoming Autumn Statement.
Tesco, M&S, and B&Q are amongst 44 retailers which have said the industry is currently facing “exceptional challenges”, the British Retail Consortium (BRC) has said.
The BRC said that the retail industry pays over £7bn per year in business rates, and currently, April 2024’s business rates increase of 6% in line with inflation will cost retailers an additional £400m.
A survey of BRC members found that over two-thirds (68%) of retailers were ‘very concerned’ about the business rates increase. All members said that an increase would place pressure on shop prices, with 69% having said it would place ‘significant pressure’ on prices paid by customers. All of the retailers said that the rates increase would hold back investment, including in new shops and warehouses.
Part of the letter sent to the Chancellor reads: “Retailers have worked hard to absorb as much additional cost as possible amidst record cost inflation over the past 18 months. Operating profit margins have significantly contracted as a result, as the CMA reported in July. This effort is starting to bear fruit as BRC’s data shows that shop price inflation fell to 6.9% in August, part of a continuing downward trend from a peak of 9.0% in May.”
Helen Dickinson, chief executive of the BRC, said: “The Chancellor must freeze rates to help keep a lid on retailers’ already high costs. With shop price inflation having eased for three consecutive months, it is vital that the Government does not add to the cost burden and undermine this progress.
“A £400m rates rise will also cost jobs, harm the economy, and damage the vibrancy of our town and city centres. While other business taxes, such as Corporation Tax and VAT, rise and fall with the movements in the economy, business rates must be paid in full whether firms are making a profit or a loss. This makes business rates the difference between retailers being forced to close existing stores rather than opening new ones.”
In March’s Spring Budget, there was a “desperately disappointing” lack of comment on business rates, said Colliers.