Chancellor Jeremy Hunt has failed to offer reform to the business rates system despite mounting pressure from retailers in what Currys chief Alex Baldock termed a “deeply disappointing” decision.
Big retailers now face a 6.62% rise on their business rates bills next April.
Baldock said that in failing to address “the unfairness of our business rates system”, Hunt had “missed an opportunity to support retailers at a time of economic uncertainty”.
The Currys boss said that retailers with stores, which provide millions of “high-value jobs”, would be hit with an additional £480m bill in April, while online-only rivals “remain significantly under-taxed”.
“If the Government is serious about supporting businesses of all sizes, promoting growth and reducing costs for consumers, it must urgently address our outdated and unfair business rates system,” he said.
Baldock also pointed up that rates, which are meant to reflect rental values, rising as rents are going down was “unjustifiable”.
Colliers head of business rates John Webber said that business rates was “heading towards being a 60% tax” and said the Chancellor had “grabbed even more cash from hard-pressed retailers”.
Harrods‘ Knightsbridge flagship will face a £617,000 increase in rates next year, while Selfridges Oxford Street will soar £577,000, according to property specialist Altus Group.
However, Hunt offered some relief for small businesses with the extension of the 75% business rate discount and a freeze to the small business multiplier until April 2025. This will benefit around 230,000 small retail, hospitality and leisure properties.
Hunt said the measures put in place would save the “average independent shop” over £20,000.
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Former New Look boss Nigel Oddy, now CEO of American Golf, welcomed the extension but said “more could have been done to support high street retail”.
“The rates system is outdated and is penalising larger retailers who are keen to invest in bricks and mortar, as well as online. Rates are an unjust burden on the balance sheets of large high street retailers and impede growth in jobs, stores, and innovation.”
Hunt also unveiled some measures designed to help under-pressure consumers.
The National Living Wage is set to increase from £10.42 to £11.44 an hour from April, and National Insurance will be cut from 12% to 10% in January.
Oddy flagged that the Chancellor could have done more to “futureproof the retail sector against talent shortages”.
“Ecommerce and omnichannel trends are leading to greater demand for highly-skilled and tech-able workers in the sector. We would have hoped for wider support to advance skills development for all retail employees,” he added.
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