Yorkshire businesses deteriorate as they subsidise Burberry

THOUSANDS of Yorkshire businesses are effectively subsidising luxury brands and being stopped from growth and investment following the Government’s decision to delay the business rate revaluation, according to research.

Earlier this year, it was announced that the government is to postpone the planned 2015 business rates revaluation until 2017, meaning struggling firms face paying business rates based on pre-recession calculations of property values.

Figures from the influential national Grimsey Review, as well as Leeds Property Consultants Dunlop Heywood’s own regional findings, find that there is stark north/south divide.

Research by Bill Grimsey, the former Iceland and Wickes chief executive who published an alternative review of the high street in September, found that retailers in London’s prime retail location – home to some of the world’s most luxurious brands such as Chanel and Burberry – will save a total of £66m thanks to the two-year postponement.

The average saving for each retailer will be £575,000 between 2015 and 2017. Burberry alone is estimated to be saving £2m in tax as a result of the government’s decision.

Grimsey said Chanel is saving nearly £3.5m and lingerie specialist Victoria’s Secret just over £2.5m.

The research found that the 2010 valuations, based upon shop rents in April 2008, would have increased on average by 72% had the revaluations gone ahead as scheduled in 2015 with the most commonly adopted value per sq m of £5,000 having risen during the last five years to £8,611.

Dunlop Heywood has calculated that Yorkshire businesses will be left with higher business rates that otherwise would have fallen by an average of 40-50% in some areas.

In Leeds, Dunlop Heywood said struggling retail locations such as Clarence Dock have seen rents drop by 50% and retailers disappearing in droves since April 2008.

The firm said the Packhorse Shopping Centre in Huddersfield has seen rents plummet by 40% leaving tenants to continue paying business rates based on figures that were calculated pre-recession rental values and woefully out of date.

Dunlop Heywood managing director, Stuart Hicks, said: “The figures are truly shocking. The government claim to want to inject some stability into the market so businesses will know what they are paying in business rates until 2017. That would make sense if it didn’t blatantly throw up huge anomalies like this where some of the most expensive retail space in the world is effectively been subsidised at the expense of poorer regions.

“It is absolutely disgraceful. It is stifling people from growing and investing. The best way to help the recovery and keep things going is to introduce the revaluation now.

“How can you justify the likes of Chanel enjoying a £3.5m saving when smaller businesses are just struggling to keep their heads above water? The revaluation would have reset the market values and restored some balance across the country, but as it is we just see an even deeper north/south divide developing.”

Earlier this year, commercial property advisor GVA called upon government to return what it said is an estimated £1bn in savings to businesses worst affected by the impending postponement of the business rates revaluation.

GVA said  that the Yorkshire commercial property market would be adversely affected by the postponement.