Retailers demand action on business rates reform

Major Yorkshire-headquartered retailers are among more than 50 high street businesses calling on the Government to take the first steps towards fundamental business rates reform in the Budget.

The letter, coordinated by the British Retail Consortium, focuses on fixing transitional relief – part of the business rates system.

Business rates are based on the rateable value of a property. Transitional relief limits the speed at which a firm’s business rates liability changes in response to changes in its rateable value.

To achieve this, it staggers the speed at which ‘underpayers’ move to their higher business rate liability (upwards transition), and funds this by slowing the speed at which ‘overpayers’ move to their lower liability (downwards phasing).

The British Retail Consortium says this forces retailers to subsidise other industries (£543m net over the last three years) and forces locations outside London to subsidise London businesses (£596m net over the last three years).

The consortium points out that retail faces some of the highest taxes of any industry. It accounts for 5% of the UK economy, yet has 10% of all business taxes, and 25% of business rates.

Campaigners argue scrapping downwards phasing would remove the harmful effects transitional relief has on retailers and businesses in the North of England. They say this could be achieved by central funding of upwards transitional relief.

Among the 52 retailers and associated trade bodies to sign the letter to the Chancellor are major Yorkshire-headquartered companies, including Asda, Card Factory, DFS Furniture and Morrisons.

Helen Dickinson, chief executive of the British Retail Consortium, said: “The future of retail is an issue that matters to people everywhere – it employs three million people and serves the needs of the entire country.

“Yet transitional relief undermines both the industry as a whole, and many regions that it serves.

“Northern high streets effectively subsidise London banks, forcing a £600m transfer of wealth to the capital; this could be used to support investment in people and technology that would benefit all parts of the UK.

“Every year retail faces higher and higher business rates bills, holding back much needed investment in an industry that is transforming at a dramatic pace.

“Swift action at the upcoming Budget would show the Chancellor was serious about levelling up all parts of the UK and supporting a retail industry towards realising a brighter future.”