Chancellor must help retail sector, says commercial property expert

More trouble on the high street

Retailers will be praying that Chancellor Phillip Hammond throws the sector a lifeline in today’s Budget, says top commercial property lawyer Richard Roberts.

Mr Roberts, partner at independent legal practice Brabners, which has offices in Liverpool and Manchester, was commenting after Debenhams became the latest big hitter on the high street to react to growing pressure within the sector that has led to a raft of closures, job losses and restructuring.

Mr Roberts said: “The prospect of further store closures from another stalwart of the UK high street, Debenhams, is yet more proof that the Government must do more to alleviate the pressure on bricks and mortar retailers.

“The Autumn Budget is just around the corner and retailers across the country will be praying for a lifeline from the Chancellor.

“It’s widely agreed that the way business rates are calculated, based on property values, unfairly impacts businesses that depend on high footfall locations.

“For example, House of Fraser’s London branch on Oxford Street paid more in rates last year than Amazon’s entire UK operation did in tax.”

He added: “Yes, traditional retailers need to adapt and change to compete with the demand for convenient, online services – we’ve seen the likes of Harrods and Selfridges post impressive financial results recently thanks, in no small part, to a shopping experience that can’t be replicated by a website.

“At the other end of the scale, Primark and Matalan continue to grow and invest in their high street presence because their business model allows them to offer value for money and immediate fulfilment.

“However, it’s imperative that the Government does its part to level the playing field and allow those in the middle to continue competing.”

John Webber, head of rating at real estate specialist Colliers International, agrees the Government must address the business rates issue.

He said, given the impact of the calamitous 2017 Business Rates revaluation, particularly on the high street, total reform of the business rates regime is needed.

“On the immediate front we recommend the Chancellor freezes any business rates increases next year, not the unsustainable 49% for top rises as currently planned, and also immediately remove downward phasing of payments, enabling business rates payers to pay their true rates liability now and not wait four years to do so,” he said.

“On the longer term, we would tackle the multiplier (the UBR against which the rateable value of the property is multiplied to give the final rates bill), reducing it to 34p in the £1 from the current 50p in the £1 – ie, the current effective 50% tax, that few can afford.

“And we would do this by looking at the system of reliefs, removing business rates deserts and introducing a fairer system of spreading the funding load, whether this be by asking all small businesses to pay a minimum contribution to the system, or by looking at other reliefs, such as agricultural reliefs which may need reforming.

John Webber

“And finally we would reform the appeals system. CCA is not working as the latest figures show. It is essential that businesses have a true and fit for purpose appeals system if they believe they have been unfairly assessed.”

Meanwhile, a poll of business leaders by accountancy and business advisory firm BDO found that Brexit is high on their list of concerns.

The Government must prioritise securing a Brexit withdrawal agreement and a defined transition period to restore business confidence, according to a their pre-Budget poll.

A significant majority (59%) of respondents indicated that finalising Brexit negotiations quickly is the single most important action that the Chancellor should take to boost the British economy.

“This has risen in importance by 36% since last year, and far outweighs this year’s second most popular action – investing in physical and digital infrastructure to improve productivity – which was favoured by less than a quarter (23%) of respondents.

And, while opinion remains divided, many businesses are reluctant for the British public to be offered a vote on any agreed terms of Brexit, with 54% against a second referendum.

Businesses are also cautious about implementing significant tax changes ahead of a Brexit withdrawal agreement, with more than half (57%) of business leaders saying that the tax status and legal rights of gig economy workers shouldn’t be adjusted until the whole economy is settled after the UK’s departure from the EU.

Ed Dwan

Commenting on the survey’s findings, Ed Dwan, partner and head of the North West at BDO, said: “Businesses are looking for direction from the Government following a prolonged period of Brexit paralysis.

“Against this backdrop of uncertainty, there is little appetite for new tax measures until Brexit negotiations are complete.

“We need to see further engagement between Whitehall departments and businesses in order to prepare for the consequences of a disorderly Brexit and to bolster the UK economy as it steers its way through a complex transition period.”