Government urged to freeze business rates to save high street

The British Retail Consortium (BRC) has called for a two-year freeze on business rates increases.

The current business rates system is unsustainable, says the BRC, adding that the retail industry, the UK’s largest private sector employer, makes up 5% of the economy and pays nearly 25% of the overall business rates bill, over £7 billion per year. This is “a disproportionate burden” and is leading to decisions to close stores, while at the same time getting in the way of the modernisation and reinvention of Britain’s high streets, the organisation adds.

The BRC says that there are nearly 2,500 fewer retail stores in the UK than there were three years ago, and since 2014 there have been over 3,200 retail insolvencies in the UK and a number of high profile CVAs. Industry profitability is also falling with net profit around 2.5%, down from 4% over the previous five years, it says.

“Fundamental reform” of the business rates system is needed and “must be considered” as part of a wholesale modernisation of business taxation, says the BRC. Its proposal for a two-year freeze in rates increases would take some of the cost pressure off retailers, it says, while allowing time for a dialogue between government and industry to develop a proposal for a modern business taxation system.

Helen Dickinson, chief executive of the BRC said: “The current business rates system is not fit for purpose. It is a 20th century answer to a 21st century problem. Retail shoulders far more than its fair share, and the rates bill is leading to store closures and getting in the way of reinvention of our high streets. The BRC is calling on government to freeze business rates until the 2021 revaluation to relieve the burden of this unfair tax on retail businesses and allow time for dialogue about the wholesale modernisation of business taxation. This would be welcome government support for the country’s largest private sector employer at a critical time.”