High Streets Initiative · 26 October 2017

High street groups demand action ahead of “unsustainable” business rates increase

London, UK - August 28, 2014: Exterior of a shop created by artist Lucy Sparrow selling traditional groceries made out of felt fabric.
High street business owners could face a business rates increase of £270m in April 2018

A collective of organisations representing Britain’s small high street firms have written to the chancellor calling for direct support in the upcoming Budget ahead of a projected £270m business rates increase for retailers in 2018.

The letter, led by the British Retail Consortium (BRC) with signatories ranging from the Association of Convenience Stores (ACS) to the British Beer and Pub Association (BBPA), was written in response to a rapid increase in the last 12 months of the inflation figure used to calculate business rates.

In September, the Office for National Statistics (ONS) uprated the Retail Price Index (RPI) to 3.9 per cent, meaning business rates in England and Wales could rise by £1.1bn in April 2018. According to the BRC, for retailers alone the increase will be £270m.

In light of the projections, the letter urged chancellor Philip Hammond to “take action to alleviate this damaging increase” in his Budget announcements in November.

“In our respective Budget submissions to HM Treasury we have asked the government to take immediate action to encourage growth and investment. Among the business groups there is a common view that the planned increase needs to be addressed,” the letter read.

The letter was sent to the chancellor ahead of the Autumn Budget on 22 November 2017
The letter was sent to the chancellor ahead of the Autumn Budget on 22 November 2017

Questions were also asked of the use of RPI to determine business rates. The government is committed to switching the measure to the Consumer Price Index (CPI) in 2020, but both the ONS and British Statistics Authority have urged an immediate switch.

The RPI is used to calculate business rates rises, and September’s figure of 3.9 per cent has been used to predict a £1.1bn increase in rates from April 2018.

“The current system is broken and at a tipping point,” the letter concluded.

In a statement, Helen Dickinson, BRC chief executive, noted the “cumulative burden of government-imposed costs” for UK retailers and said the upcoming Budget was vital in “setting ourselves up for success”.

“With retailers’ margins being squeezed to their limit, this is money that could be better spent investing in keeping prices low for consumers, in local communities up and down the country and in developing a workforce which is fit for the future,” Dickinson said.

“Without the chancellor’s intervention, the consequences for town centres and jobs will be even more keenly felt in the most vulnerable communities.

“Retailers want to help build the confidence of their customers, us all as shoppers, not damage it. But to do this they need the support of government policy that keeps down the cost of living, not exacerbates it. That encourages, rather than deters the retail investment necessary to meet constantly evolving customer expectations. And finally, policy action that enables retailers to maximise their vital contribution to the government’s productivity aspirations.”

Business rates hike could lead to “tsunami” of high street closures

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ABOUT THE EXPERT

Simon Caldwell is a reporter for Business Advice. He has a BA in politics and communications from the University of Liverpool, and previously worked as a content editor in the ecommerce industry.

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