The British Retail Consortium (BRC), which lobbies government on behalf of retailers is urging the new Chancellor Rachel Reeves to scrap business rates for shops as a matter of urgency.
The BRC represents the likes of Boots, Superdrug and Marks & Spencer, as well as online sellers such as Shein and Boohoo and SME retailers.
Business rates are based on a property’s ‘Rateable Value’ (RV), an estimate by the Valuation Office Agency (VOA) of how much it would cost to rent a property in a financial year. Retail properties are often based in premium locations which means they are paying much higher business rates, compared to online retailers such as Amazon, whose warehouse premises are out of town or in regeneration areas that can also attract various grants or relief schemes.
Currently, companies pay 54.6p for every pound of their property’s RV after it went up in April. The increase was based on September 2023’s inflation figure of 6.7 per cent, a bone of contention as inflation now sits at 2.2 per cent.
Ahead of Labour’s budget announcement on October 30, BRC’s chief executive Helen Dickinson said: “Labour’s first Budget is a golden opportunity to make good on their manifesto commitment and fix the broken business rates system which is holding back investment in people, places, technology and limiting growth.”
A government spokesman said they are “committed to a fairer business rates system.’ but there have been no references made to the beleaguered tax system in any Treasury speeches since Labour came to power in July, which suggests it will not be a priority in Reeves’ first budget.
BRC has also released figures that show UK retail sales between July 28 and August 24 were just 1 per cent higher than the same period a year earlier.
On a more positive note, a new survey out this week says business confidence remained at an almost nine-year high in August. Lloyds Bank’s Business Barometer put overall business confidence at 50 per cent last month, unchanged from July and the highest level since November 2015.
The reading was well above the long-term average of 29 per cent, which it has remained above for the last 15 months.