With a 3m strong workforce, the retail industry is one of the biggest in the UK, making it a leading contributor to the UK economy. Yesterday‘s Autumn Statement from Chancellor George Osbourne has gone against the industry, leaving retailers fearing the stability of their future.
“If anything, rates will create a greater push towards a move online, but this could mean less retail jobs becoming available. Inevitably, the high street will die as the consumer chooses the online shop over the bricks-and-mortar store” said Phil Mullis, Head of Retail and Wholesale at Wilkins Kennedy LLP.
Business rates are of key importance for businesses and for the Treasury, as it generates valuable income. As a result, it has become clear that for the maintenance of fiscal neutrality, rates will never be scrapped, only reviewed.
“We welcome the Chancellor‘s commitment to extending small business rate relief in 2016; this is a measure that helps businesses to the tune of over £1bn each year and is essential in giving local shops the opportunity to invest in their staff, property and services” said ACS Chief Executive James Lowman.
“We are however disappointed that no announcement has been made on the continuation of the business rates discount of £1,500 for high street retailers. We argued for the Government to increase this discount and if the Chancellor scraps it, it will hurt businesses coming to terms with increased wage costs and uncertain rates bills”.
In addition, oncoming increases in the living wage could result in an extra £14bn being spent by the retail sector over the next five years. If rates are not given a significant overhaul, the increased costs to retailers could result in a higher tax take as well as a threat to the welfare of retail.
The general consensus in regards to business rates is that they need to be fairer and up to date. While it may be assumed that smaller retailers will be left with the burden of change, larger retailers are also threatened by these alterations. To stabilise the future of the high street, the Government must be more aware of the way retail is changing and be more proactive and sensitive to overcome its recent struggles.
Businesses have voiced that in order to plan for the future, certainty is necessary in regards to business rates. Retailers anticipate the 2016 Budget for more information on the Government‘s review of the new rates that will affect them.