Business charges are ‘killing the High St’: Co-op boss warns Reeves over hovering tax burden

Rachel Reeves has been warned that high streets will start to ‘die off’ without a shake-up of the ‘archaic’ business rates system.

Hours before the Chancellor sets out her mini-Budget, the bosses of the Co-operative Group and B&Q-owner Kingfisher urged her not to penalise the industry with increases to the property levy.

The comments came as shares in FTSE 100 giant Kingfisher tumbled 14.1 per cent – wiping £700million of its value – after it warned of rising costs and subdued consumer sentiment due to budgets in the UK and France.

Retailers from independent shopkeepers to nationwide chains face an increase in business rates next month alongside a barrage of other costs imposed by Reeves. 

This includes the increase in National Insurance paid by employers and inflation-busting rises to the minimum wage.

In total, retailers are facing a £7billion rise in costs and are calling on the Chancellor to ease the burden by reforming business rates.

Plea: The bosses of the Co-operative Group and B&Q owner Kingfisher urged the Chancellor (pictured) not to penalise the industry with increases to the property levy

Co-op chief executive Shirine Khoury-Haq told the Mail that the ‘layering of cost pressures’ on the industry poses a threat to small businesses and their local communities.

She added: ‘There is a real danger that we do see our high streets starting to die off, and we can’t let that happen.’

The issue has been highlighted by the Mail’s Save Our High Streets campaign.

Looming increases to rates – which are based on the value of a property and therefore hit bricks-and-mortar stores harder than online operators – will be especially painful for small firms. 

This is because Labour has slashed Covid-era relief, meaning small shops could be ‘priced off’ the High Street when their bills rise by 140 per cent in April, Khoury-Haq warned.

Co-op faces a £150million hit due to Reeves’s Budget but says it can stomach the costs without job losses or store closures, unlike many independent chains.

She added: ‘It’s not just retail that suffers, it’s jobs, it’s local services, it’s community well-being and, so importantly, it’s the future of our young people.’

Echoing her remarks, Kingfisher chief executive Thierry Garnier warned the system was ‘a very archaic and old model that is punishing bricks-and-mortar retailers in the UK’.

Reforms are ‘all the more necessary’ given speculation that the UK could reduce taxes paid by US tech firms, including rivals such as Amazon, he said.

Kingfisher estimated profits for its current financial year would be between £480million and £540million. 

This is a far cry from the £1billion made during the pandemic by the owner of Screwfix and B&Q in the UK, and Castorama in France. 

Garnier warned of £145million in additional costs due to higher taxes this year. He said the DIY retailer would also see its rates increase under the Chancellor’s plan to whack up the business rates charged on larger sites and called for ‘proper reform’.

The idea is to snare big warehouses used by the likes of online giant Amazon. But it is feared the move will backfire as it will also hit large stores.

Andrew Goodacre, of the British Independent Retailers Association, said higher rates would be ‘damaging’ for small businesses.