Call to support region’s retail sector through Business Rates and Apprentice Levy rethink

The Government has been urged to rethink next April’s Business Rates rise and reconsider its Apprenticeship Levy to provide vital support for retailers.

The call comes from employers’ organisation, the CBI.

New research by CBI Economics, conducted on behalf of the CBI and its retail members, reveals retail and wholesale activity is now worth £352bn a year to the UK economy. It supports one in five of the nation’s jobs, with 5.7 million people employed within the sector or its suppliers.

In the North West alone, the sector is worth £35.523bn to the economy and sustains 677,027 jobs.

That includes: Manchester – £4.482bn and 73,054 jobs (20% of area’s total); Liverpool – £2.241bn and 44,847 jobs (20% of area’s total).

All of this adds substantial benefits to the public purse, too, with the £50bn retailers and wholesalers pay nationally in taxes enough to fund 110 new hospitals a year.

Yet the fall out from COVID and war in Ukraine continues to weigh heavily on the sector, and an inflation-linked 10% Business Rates hike due in the spring risks plunging many firms into a fight for survival. A slow revaluations system also means retailers and wholesalers are already overpaying, with many facing liabilities as high as rents.

That is why the CBI – supported by the British Retail Consortium (BRC) – is urging government to both rethink the planned rise and implement longer term reforms which reward investment.

The CBI is also keen to see greater flexibility in the Apprenticeship Levy, a move which could have an enormous impact on a sector which already spends £4bn a year on training. This amounts to a tenth of all training spend in the UK.

Together, these measures could generate renewed optimism and investment in a sector which plays a vital role in North West communities, the wider economy and the growth prospects for UK plc.

CBI North West Director Damian Waters said: “Retail and wholesale businesses have remained at the epicentre of every economic ecosystem in the North West throughout the crises of the pandemic, war in Ukraine, supply chain disruption and surging costs.

“The sector has often been the first line of defence during these economic headwinds, and continues to prioritise supporting households, as well as their employees, through these challenges.

“With economic growth now a national imperative, the industry is once again leading the charge. Retailers and wholesalers continue to invest heavily in training their employees – they not only decarbonise their own operations, but help their customers reduce their carbon footprint too, and they’re levelling-up in action, as anchor points on British high streets.”

He added: “Amid unprecedented levels of inflation and a cost-of-living crisis, it has never been more important to have retail and wholesale firing on all cylinders.

“That is why we are asking government to smooth the looming Business Rates cliff edge – without intervention, the eye-watering rises scheduled for April will present an existential threat for many businesses which communities depend on. Longer term reforms which encourage investment and fresh thinking on the Apprenticeship Levy can help future-proof the sector and spur further growth.

“While this is a fragile moment for the economy, and the immediate focus is rightly on restoring macroeconomic stability, there is real ambition within retail and wholesale to help unlock the huge growth opportunities for North West businesses. They know the right actions now mean we can look forward to a 2023 of promise, potential and prosperity.”

Mohammad Jamei, director of CBI Economics, said: “The retail and wholesale sector has undergone significant change over the recent decade and is on the cusp of digital transformation. It has also been a key sector delivering for its customers and its employees throughout the challenging times of recent years. The sector, therefore, has a lot to contribute both in overcoming short term challenges and in creating future economic opportunity, driving technological advancements to keep ahead of consumer need, and creating transferrable digital skills to safeguard employees’ future and enable their progression.”

Helen Dickinson, chief executive of the British Retail Consortium, said: “Unless action is taken, retailers face an additional £800m in business rates every year from 2023. This is money that better spent keeping prices low and supporting local communities. Government should drive investment and protect customers by freezing, or limiting, this rates increase, and ensure retailers pay no more than they owe in rates by reforming the broken transitional relief system.

“Government should also reform the Apprenticeship Levy. Currently, hundreds of thousands of pounds are wasted every month, meaning missed employment opportunities, missed training, and missed career progression. Government must make the levy more flexible so retailers can use the funds for high quality pre-employment courses, short in-work developmental courses and to cover other costs related to training their people.”