Tesco and Sainsbury’s have warned that Rachel Reeves’ proposed overhaul of business rates risks accelerating the decline of Britain’s high streets.
The proposed changes, expected to be announced in the Chancellor’s next Budget, would see supermarkets, department stores and other large retailers pay more under a new, tiered model intended to reduce rates for smaller stores and online players.
According to the Telegraph, retailers said the shake-up – part of efforts to plug a £5bn hole in public finances – would drive up costs across the industry, adding to the strain of higher National Insurance Contributions and wage rises introduced earlier this year.
Tesco chief executive Ken Murphy said: “Increasing the burden on large shops would hinder rather than help our town centres. Many of these shops are anchor stores in their local communities.”
Meanwhile Simon Roberts, CEO of Sainsbury’s, warned that larger chains could “pull away from our high streets” in response to rising costs.
“The changes being proposed will further increase the negative impact of business rates and won’t stimulate the growth or investment into our high streets and jobs that we all want to see,” he said.
“The Government promised fundamental reform to level the playing field but the changes we are hearing about will not deliver this – they will not stimulate growth or investment.”
-
Related Story
-
The retail backlash is echoed across the wider industry. Currys boss Alex Baldock accused the Government of “rushing” the reforms and warned they could force more store closures.
He said: “Over-burdened retailers are already grappling with a perfect storm of extra costs and red tape. That’s bad for jobs, investment and growth. The mooted hikes in business rates will just make things worse.”
Baldock added that the overhaul would “shutter more stores” and “leave more gaps on the high street”, while damaging employment prospects for young people.
Thierry Garnier, CEO of B&Q owner Kingfisher, added the reforms would “harm communities across the UK”.
“Larger physical stores, which support more jobs, should not be penalised through a higher multiplier,” he explained.
The hospitality sector is also raising concerns. Fuller’s CEO Simon Emeny said pubs are already carrying a “ridiculously disproportionate” share of the business rates burden. JD Wetherspoon chairman Sir Tim Martin said pubs are disadvantaged by having to pay VAT on food sales, unlike supermarkets.
According to government modelling, the impact of the proposed reforms will be felt widely across retail and hospitality, affecting businesses from hotels and restaurants to cinemas and zoos. However, only a fifth of the affected properties are warehouses used by online retailers.
A Treasury spokesperson said: “We are a pro-business Government that is creating a fairer business rates system to protect the high street, support investment and level the playing field.
“To deliver our manifesto pledge and provide certainty and support to the high street we intend to introduce permanently lower tax rates for retail, hospitality and leisure properties from next year.”
Click here to sign up to Retail Gazette‘s free daily email newsletter
