Tax & admin · 11 November 2015

John Lewis and M&S call for fundamental reform of business rates north of the border

Inverness high street
Inverness high street

John Lewis and M&S are among the high street retailers which have warned that jobs could be at risk if fundamental reform of business rates north of the border doesn’t occur.

In an open letter in The Herald newspaper, Boots, Greggs, Harvey Nichols Edinburgh, John Lewis and M&S were among the 40 firms and business groups requesting an overhaul.

They asked Scotland’s political parties to commit to reforming business rates ahead of the 2016 Holyrood election.

This came following the news that the chairman of John Lewis Partnership, Charlie Mayfield, Sainsbury’s chief executive Mike Coupe and Helen Dickinson, the director general of the British Retail Consortium (BRC) met with financial secretary to the Treasury David Gauke last week to discuss the government’s ongoing review of rates.

Chancellor George Osborne launched the review in March and is expected to report on the initial findings during his Autumn Statement on November 25.

Retailers are concerned there won’t be much in the way of an overhaul due to government ambitions to keep the review “fiscally neutral”.

A source close to the talks reported that the meeting focused on urging the rates burden to be shared out more fairly throughout the economy with other firms.

Firms have long been concerned about business rates, saying the system is outdated and hindering Britain’s high streets – with small and big retailers both feeling the pinch.

The open letter in The Herald covered representatives from a number of industries, including retailing, manufacturing, engineering, publishing and tourism and leisure.

It said: “There is a strong and growing consensus across business and industry in Scotland that the current business rates system is out of date, no longer fit for purpose and in need of fundamental reform.”

It said the current system was “a tax on jobs and growth, undermining investment in property and acts as a drag on the Scottish economy”.

“We want Scotland to be – and perceived to be – the best place within the UK in which to do business, however an unreformed system of business rates is entirely at odds with this aspiration.”

The Scottish government announced last month that councils north of the border would be given the power to cut business rates.

Deputy first minister John Swinney said ministers were committed to giving communities “real control over their own futures”. Retailers though, claimed that business rates “fail to flex” with wider economic conditions and also fail to take account of a company’s profitability.

In response to the open letter, Swinney said Scotland’s business tax environment was already the most competitive in the UK.

“To maintain this competitive advantage, the Scottish government is keeping the business rates framework under active review, building on the 20point action plan we put together following our consultation in 2012-13.”

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Rebecca is a reporter for Business Advice. Prior to this, she worked with a range of tech, advertising, media and digital clients at Propeller PR and did freelance work for The Telegraph.

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