Retailers are set to be slapped with a further business rates hike of over £180 million next April after today’s Consumer Price Index (CPI) measure of inflation dropped to 2.4 per cent.
The controversial business rates system, which has been hammering the retail industry over the past year and has been cited as one of the key reasons for its current woes, is calculated every April based on the CPI of the previous September.
Today the Office for National Statistics (ONS) said the CPI fell from 2.7 per cent in August to 2.4 per cent throughout September.
In the third consecutive year that business rates will be calculated under the widely criticised revaluation system, the gross business rates bill for 2019/2020 will increase £728.20 million.
According to real estate advisor Altus Group, £186.45 million of that will be taken on by the already embattled retail industry.
Businesses in London will once again be hardest hit, shouldering £233.98 million of the gross increase, while the South East will also see a £108.62 million increase, nearly double the £57.4 million increase seen in the South West.
The industry’s leading voices have been heavily critical of the system since its introduction.
This morning shadow business secretary Rebecca Long-Bailey called on Chancellor Philip Hammond to reform business rates in his upcoming Autumn Budget, stating that business rates were a “root cause” for the 100,000 retail redundancies seen over the past three years.
Head of the British Retail Consortium (BRC) Helen Dickinson added: “These figures confirm that the retail industry, which is under significant pressure from public policy and a consumer and technology-led transformation, will face yet another eye-watering rise in business rates next April.
“The burden of the current business rates system, which is in urgent need of reform, is leading to store closures and hindering the successful reinvention of the retail industry.
“Ministers need to act to address this £180 million increase in retailers’ already unsustainable business rates bill, along with other public policy burdens which retailers are struggling to absorb the cost of.
“We need a freeze in the business rates multiplier until the next revaluation to help save shops, protect jobs, and future-proof retail, and to give the Government time to work with industry to reform the business tax system and make it fit for purpose in the 21st century.”
Furthermore, Altus Group’s head of business rates Robert Hayton urged the Chancellor to freeze the rates, stating: “Businesses, until this year, have had to endure annual increases at the higher discredited RPI measure.
“Since 2010, the average rates bill has risen by a fifth through the compound effect of inflation. Our high streets are engulfed in crisis. Brexit uncertainty is hurting both manufacturers and the services industries. It is time for the Chancellor to take a step back and support business through an unprecedented stimulus by freezing rate rises next April.”