Bosses demand pressing enterprise charges shake-up

Britain’s biggest retailers are demanding an urgent overhaul of business rates amid fears more than 17,000 shops could close over the next decade unless the hated system is reformed.

Labour has promised to ‘level the playing field between the High Street and online giants’ by replacing the levy, which is paid on the rateable value of a commercial property.

But in her first Budget, Chancellor Rachel Reeves left firms facing a £140 million increase in their bills next year.

She slashed rates relief from 75 per cent to 40 per cent with a cap of £110,000, meaning that smaller firms in particular will pay significantly more.

That is on top of a £2.3 billion rise in employers’ National Insurance Contributions and £370 million for the larger-than-expected jump in the National Living Wage, according to the British Retail Consortium trade body.

‘We urge the Government to reconsider,’ said Alex Baldock, chief executive of electrical retailer Currys.

Reform: Britain’s biggest retailers are demanding an urgent overhaul of business rates amid fears more than 17,000 shops could close over the next decade

‘The rates relief proposed so far isn’t just too little, too late, but will actually leave many retailers worse off,’ he said.

His call was echoed by Rami Baitiéh, the boss of the Morrisons grocery chain: ‘The current proposal threatens to drag hundreds of supermarkets – which are crucial to thriving High Streets – into even higher business rates.

‘We urgently need a business rates system that is fair, proportionate and which genuinely levels the playing field between retailers and online operators,’ he added.

Under Labour’s plans, premises with higher rateable values would pay more. It has depicted this as targeting warehouses used by online shopping giants, but it would also hit bricks-and-mortar supermarkets. The retail sector pays £33 billion, or 7.4 per cent, of all business taxes, which is one-and-a-half times more than its share of the overall economy, according to the BRC.

Business rates make up a fifth of the total tax that retailers pay – the highest of all sectors.

The UK has already lost 6,000 shops in the past five years and in two-thirds of these closures, business rates had a material impact in the decision.

The BRC estimates that another 17,300 shops could close over the next decade unless action is taken.

The Chancellor has delayed the introduction of a new business rates system until 2026 at the earliest.

In the meantime, smaller retailers will pay thousands of pounds more because of the reduction in relief. Experts fear that many will have gone out of business before Labour’s new system comes into effect.

‘It is crazy,’ said Doug Putman, owner of music retailer HMV.

He added that he felt as though governments have been kicking the issue ‘down the road’ since he bought the business in 2019.

‘At some point, they have to stop looking at it and actually do something about it,’ he said.

On top of the additional employment costs, observers fear that the extra cost of business rates and the further delay to reform will tip some smaller operators over the edge.

Meryl Halls, managing director of the Booksellers Association, said it was of ‘deep concern’ that 40 per cent of its more than 1,000 independent bookshop members face an average annual cost increase of £9,341.

She urged the Government to ‘reconsider the timeline’ and ensure ‘vulnerable businesses aren’t left clinging on financially for a year before lifeline reforms are introduced’.

The British Beer and Pub Association reckons the average pub will see its bill go up from £12,000 to around £18,000 next year.

And the boss of the British Independent Retailers Association said his 4,500 members – including garden centres, DIY shops and furniture retailers – were ‘reeling’ from the coming increase.

Andrew Goodacre said: ‘High Street shops can take no more.’

He called on the Government to retain the 75 per cent rates discount.

‘Business rates have been more than doubled, at a time when independents can least afford it. This seems a clear breach of a manifesto promise.’