Retail chiefs are pleading with the Chancellor for urgent business rates relief
Retailers have called on the Chancellor to extend Covid-era aid and then introduce permanent reforms that would level the playing field.
The High Street is facing a £2.5 billion business rates increase that threatens to devastate pubs and shops unless Rachel Reeves intervenes.
This is the stark warning from both the British Retail Consortium (BRC) and UK Hospitality, who called for urgent action in the Budget on Wednesday.
Business rates are a levy based on the value of commercial property – meaning shops pay a premium compared to online giants such as Amazon.
The two organizations called on the Chancellor (pictured) to extend Covid-era aid and then implement permanent reforms that would level the playing field.
With the relief, all catering and retail companies have shaved 75 percent off their invoice. But from April next year their bills will rise to £11 billion, forcing many to raise prices or close down.
According to the BRC and UK Hospitality report, the High Street will go from paying 34% of all rates this year to 44% in 2025, despite accounting for just 9% of the economy.
They claim this is unfair because online companies don’t have to spend as much for their massive warehouses.
Kate Nicholls, CEO of UK Hospitality, said: ‘High street businesses paying a third of all business rates is absurd and one of the main reasons we see our businesses facing financial challenges – it makes running a pub, bar, café or restaurant, to name just a few, extremely expensive.’
Cutting rates could “unlock millions in investment from new locations into more jobs” and save local communities from “countless closures”, she added.
Echoing this, Helen Dickinson, CEO of BRC, said: ‘Consumers want diverse and thriving high streets, but this is being held back by the broken business rates system.’
She called the tariffs “the biggest barrier” to retailers investing in new stores and jobs.
High Street employers want a permanent lower rate to be used to calculate how much businesses have to pay, meaning lower bills.
It is a major fear alongside possible tax increases, including increasing employer contributions to national insurance and Deputy Prime Minister Angela Rayner’s plan for workers’ rights.
The latest plea came just a day after Marks & Spencer boss Stuart Machin warned against raising business taxes. He said: ‘It could improve public finances in the short term, but it will make economic recovery more difficult and hit our customers and colleagues who are still struggling with the cost of living.’
Labor has promised reforms, saying the system ‘discourages investment, creates uncertainty and places an unnecessary burden on our high streets’.
In its manifesto, the party promised to ‘replace the business rates system so we can generate the same revenues, but in a fairer way’.
But companies fear the reforms will be too little, too late in light of the shutdowns.
The brewers also sounded the alarm. The British Beer and Pub Association warned it was facing ‘a raft of new punitive rules and costs, which could spell the end of many businesses and jobs’.
Chris Jowsey, boss of Admiral Taverns, argued that tax rises would ‘simply fuel inflation, meaning customers will pay more to socialise’.
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