Criticism is mounting over business rates failures as Kingfisher unveils a £31 million budget hit
The boss of B&Q owner Kingfisher last night joined the chorus of retailers calling for an ‘urgent’ review of business rates to offset the budget pain inflicted on British businesses.
As Rachel Reeves tried to defend her tax and spending plans at the CBI conference, Thierry Garnier said radical reforms to the hated rates system were ‘even more important’ given the extra costs faced by the High Street.
Retailers took a £7bn hit in the budget when the chancellor broke Labour’s manifesto to increase national insurance and approved an inflation-busting increase in the minimum wage.
In a further costly setback for the sector, she left the High Street facing a £140m rise in business rates and postponed any meaningful reform of the system until 2026.
The British Retail Consortium estimates that 17,300 stores could close over the next decade unless the rates regime is overhauled.
The issue has been highlighted by the Mail’s Save Our High Streets campaign.
Kingfisher boss Thierry Garnier (pictured) said radical reform of the hated fares system was ‘even more important’ given the extra costs facing the High Street
Garnier revealed that Kingfisher – owner of both Screwfix and B&Q and a member of the FTSE 100 index of Britain’s leading companies – will make a £31 million loss next year from the National Insurance increase alone.
The company also faces £14 million in additional taxes in France, where it owns Castorama.
Kingfisher’s shares tumbled 13.3 percent, leaving its value at £5.35 billion, as extra costs and slow sales forced it to cut profit expectations for the year to between £510 million and £540 million. after previously expecting £550 million.
“With all the additional costs facing the retail sector, it is even more important and urgent that we see fundamental reform of business rates to reduce the unfair burden on all retailers with stores,” Garnier told the Mail.
Business rates are a local levy based on the value of commercial property, meaning shops pay a premium compared to online giants such as Amazon.
Well-known names from Marks & Spencer to Currys have spoken out against this, calling it unfit for purpose and inconsistent with modern times.
Labor promised in its manifesto to ‘replace the business rates system’ to ‘level the playing field between the high street and the online giants’.
But instead of taking radical action on the budget, Reeves cut the Covid-era rate cut from 75 per cent to 40 per cent and imposed a cap of £110,000.
She launched a “conversation” about what a fairer system would look like, proposing lower bills for smaller buildings, but not until 2026, to be paid for by higher bills for more valuable properties.
Garnier said this will “simply punish retailers with larger stores and further hold back investment, growth and job creation across the country.”
His concerns were echoed by Gavin Peck, chief executive of stationery chain The Works in High Street, who said: ‘We have repeatedly called for a review of rates as the system is an unbalanced method of raising taxes and is completely out of touch with the value of real estate. .’
He said he hopes “meaningful changes are made”, but added that until then he faces increases to national insurance and the minimum wage, as well as higher business rates.
In her first Budget as Chancellor last month, Reeves announced £40 billion in tax increases, including a £25 billion National Insurance raid on employers.
“There is no doubt about the extent to which things were milked in the previous budget,” CBI chairman Rupert Soames said.
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