Chancellor George Osborne delivered his Autumn Statement this afternoon and failed to announce a long hoped-for business rates freeze in 2013, increasing financial pressures on struggling retailers.
Over the last two years, business rates have risen substantially, up 4.6 per cent on the previous year in 2011 and rising 5.6 per cent this year and experts feel that ignoring the possible freeze will prove highly damaging to the retail sector.
Stephen Robertson, Director General of the British Retail Consortium (BRC), the pressure group which has been particularly vocal on the issue, expressed disappointment at the move.
“The Chancellor’s failure to offer immediate support for struggling high streets by announcing a business rates freeze is disappointing
“The Chancellor should have removed the threat of a further 2.6 per cent, £175 million increase next April to avoid more empty shops.
“It’s welcome news that small retailers will benefit from relief for an extra year but retail CEOs tell us a third successive substantial rates hike will deliver a further blow to investment and job creation. It is not too late for the Chancellor to offer a freeze to prevent that.
“The Government has already said it will review the mechanism for setting rates increases in future and introduce a fairer formula for the future. This needs tackling urgently.”
The BRC has also called for a delay to increases in fuel duty in recent times and Osborne’s move to cancel the rise has been greeted with relief both by consumers and businesses.
In general terms, the Autumn Statement highlighted the weakness of the British economy as Osborne announced that austerity measures are set to last until 2018 after conceding that the Office for Budget Responsibility believes that the Government will miss its 2015/16 debt fall target.
Speaking in the House of Commons, Osborne said: “It’s taking time, but the British economy is healing.
“At home, we live with the legacy of a decade of debt and the failure to equip Britain to compete in the modern world.
“We also have to be on the side of those who want to work hard and get on. I know how difficult many families have found the cost of living. In dealing with the deficit, we’ve had to save money. But whenever I’ve been able to help, I have.
“There is a 3p per litre rise planned for this January. Some have suggested we delay it until April. I disagree. I suggest we cancel it altogether.
“There will be no 3p fuel tax rise this January. That is real help with the cost of living for families as they fill up their cars across the country.
“And it will help businesses, too.
“It means that under this Government we’ll have had no increase in petrol taxes for nearly two and a half years.”
In other good news for businesses, it has been announced that the Government will create a long grace period for new buildings prior to having to pay empty property rates, introducing the “sensible” measure in October next year.
Industry body the British Council of Shopping Centres (BCSC)’s Director of Policy and Public Affairs Edward Cooke commented:
“We welcome the Chancellor’s decision to extend empty property rates relief for new build, and believe the decision to do so fully vindicates the view of the industry that the change in policy in 2008 has done little more than raise taxes and create a barrier to much needed investment.
“We hope this result will encourage more well planned and managed development in our towns and cities.
“Although this is undoubtedly a good outcome for the retail property industry, we would of liked Government to have gone further and applied this change to significant refurbishment as well, as we have been arguing for.
“BCSC looks forward to working with Government on the detail of this announcement.”
Elsewhere, Osborne took the opportunity to comment on alleged tax avoidance from large businesses such as Starbucks and Amazon and promised that the Coalition will take action against those who aggressively avoid payment.
On corporation tax, Osborne said that the main rate of corporation tax is to fall by a further one per cent so that, from April 2014, the corporation tax rate in Britain will stand at 21 per cent, “the lowest rate of any major Western economy.”
While the overall economic outlook appears bleak at best, Robertson acknowledged that there are reasons to be positive about the retail sector in the months ahead.
“The Chancellor’s made some bold moves to reassure for the long-term and give struggling households and businesses the confidence to spend and invest,” he said.
“We’ve been calling for more urgent action on growth. We asked the Chancellor to concentrate on delivering in a few robustly pro-growth areas that would really make a difference to customers and retailers.
“This Statement goes a long way towards delivering this but not always quickly enough.
“There were welcome measures, on fuel duty, infrastructure investment and business and personal taxes but some of these are not due until 2014.
“Retail sales are flat. 2013 will be another tough year. It’s retail where many young people start their working lives yet jobs in non-food retailing are actually falling.
“Much more needs to be done to support the retail sector in its contribution to overall growth.”