- Celebrities are pressuring both major political parties to put the issue on their priority lists
- Business rates apply to commercial facilities such as stores.
- The prices are said to be unsuitable for modern times.
Many big shop owners are calling on politicians to finally act to fix the broken business rates system.
Prominent figures including Next, House of Fraser and Currys are pressuring both major political parties to put the issue on their priority lists ahead of this year’s general election.
While business rates levied on stores and other commercial facilities are said to be inappropriate for the modern era, impending price increases risk perpetuating inflation and hurting investment.
Weak Next boss Lord Wolfson told the Daily Mail that interest rates in many locations are “often out of sync with rents”, making it “unlikely for the system to reflect quickly the realities of individual trading locations”. “It’s important,” he said.
Ahead of the fall election, Wolfson wants “a rate system that is more sensitive to local trading conditions” rather than “taking away money.”
Marks & Spencer chief executive Stuart Machin told the Mail on Sunday last month that politicians “don’t understand or value” British retail. In his Autumn Statement in November, Treasurer Jeremy Hunt announced that major retailers’ business rates bills would rise by 6.7%, the rate of September inflation. This means a rate hike of £500m from April.
Currys chief executive Alex Baldock said the price hike was “very reckless to say the least”.
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Scott Parsons, chief operating officer of shopping center owner Unibail-Rodamco Westfield, said fees were the “single biggest challenge” facing the industry. Business rates are charged based on the rental value of shops, restaurants, pubs and other commercial properties. These represent a large portion of many companies’ annual costs.
By comparison, critics of the system believe that online retailers like Amazon are not paying their fair share of warehouse taxes. As a result, retailers have long complained that their brick-and-mortar stores are being penalized. Nick Lakin, group director of corporate affairs at B&Q, and Mr Kingfisher, owner of Screwfix, have launched a lengthy review that will remain inconclusive for several years with the government and, if elected next year, the Labor Party. Instead, he called for urgent action.
Currys director Baldock met with Shadow Chancellor Rachel Reeves to discuss the issue and believes Labor is doing a “better job of reaching out to businesses” than the Government.
Nick McKenzie, president of pub group Greene King, said: “Rising costs of doing business threaten the future of our industry.”
Chris Wootton of Frasers Group, owner of House of Fraser and Sports Direct, said it had opened ministers’ eyes to how “complex” the system was.
Helen Dickinson, head of the British Retail Consortium, accused Mr Hunt of “spiraling taxes out of control and driving up costs just when retailers’ efforts to curb inflation are beginning to bear fruit”. .
A Treasury spokesperson said: “We have completely exempted a third of properties from paying business rates, while protecting over one million business property bills from inflation.”
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