// More than 50 retailers call for “fundamental” reforms to business rates system
// The letter, co-ordinated by the BRC, is addressed to Chancellor Sajid Javid
// Signatories include the bosses of Asda, Sainsbury’s, M&S, Harrods, Iceland & River Island
More than 50 major UK retailers have written to the government demanding action to overhaul the “broken” business rates system.
Bosses from companies such as Asda, Sainsbury’s, Marks & Spencer, Harrods, Iceland, F Hinds, and River Island have written to Chancellor Sajid Javid calling for “fundamental” reforms to the taxes paid by businesses on the properties they occupy.
The letter was co-ordinated by the BRC and is signed by the bosses of retailers from across the sector: supermarkets, food-to-go, fashion, homeware, and department stores.
The letter highlights how retail remains the largest private sector employer in the UK, employing approximately three million people.
It also argues that the industry accounts for five per cent of the UK economy, yet is burdened with 10 per cent of all business taxes, and 25 per cent of business rates.
The retailers that signed the letter demand four fixes that would address many of the challenges posed by business rates.
This includes a freeze in the business rates multiplier, which is set by the government and adjusted each year in line with inflation.
Other recommendations are fixing transitional relief as it currently forces many retailers to pay more than they should, introducing an “improvement relief” for ratepayers, and ensuring that the Valuation Office Agency is fully resourced to do its job.
The letter notes that implementation of these four recommendations “could be undertaken quickly, would reduce regional disparities, remove barriers to the proper working of market forces, incentivise economic investment, and cut away at least some of the bureaucracy of the current system”.
BRC chief executive Helen Dickinson described the current business rates regime as “broken”, and that it “holds back investment, threatens jobs and harms our high streets”.
“The fact that over 50 retail CEOs have come together on this issue should send a powerful message to government,” she said.
“Retail accounts for five per cent of the economy yet pays 25 per cent of all business rates – this disparity is damaging our high streets and harming the communities they support.”
She added that by taking swift action of these recommendations, the Chancellor “would send a clear message that the new government understands the needs of local communities and that it will act decisively to support the jobs of the country’s largest employer”.
The letter also said that the reforms should be put “at the heart” of an economic package promised by Prime Minister Boris Johnson to boost business as the UK leaves the EU.
Association of Convenience Stores chief executive James Lowman said retailers needed “support and incentives”, not increased tax bills.
“The business rates system needs fundamental change to address this perverse incentive,” he said.
“There is much more the government can do now to help small businesses, and their first priority should be extending rate relief for more businesses and for beyond the next financial year.”
Harrods managing director Michael Ward said he hoped the government would have the ambition to undertake “a drastic review of Britain’s out-dated business rates tax system”.
River Island chairman Clive Lewis said: “The burden that rates places on all high street businesses not only stifles growth but is a major contributor to the closure of stores and the resulting decline in towns across the country.”
F Hinds director Andrew Hinds said: “We fear for the future of our market towns as many shops now have rates bills which bear no relation to the reality of trade in those locations.
“If our local shopping areas decline then the old, the poor and country dwellers will be hugely disadvantaged as they have less access to the internet and also to city centre and out of town shopping centres.
“Government must decide whether they want smaller places to thrive or to become ghost towns.”
Meanwhile, Iceland managing director Richard Walker described business rates as an “outdated Victorian taxation system” that has “little relevance to our modern multi-channel retail economy”.
“Fundamental reform of the system is the only way we will stem the decline of high street communities up and down the country,” he said.
The letter comes a day after new figures showed the number of empty shops in town centres had risen to its highest level since 2015, with the vacancy rate hitting 10.3 per cent.
It also comes after reports emerged that Tesco has quietly been building up support for its plans to overhaul business rates, with finance chief Alan Stewart writing a series of letters to the bosses of rival retailers.
Tesco chief executive Dave Lewis wants the government to cut business rates by 20 per cent and make up the shortfall with a two per cent levy on all online retail sales.