Four in five UK retailers could close stores if no business rates reform is agreed by the government at its upcoming and long-awaited review, according to a new report.
A survey of major retailers conducted by the British Retail Consortium (BRC) found that 83 percent of respondents said they are either likely or certain to close stores unless the rates burden is reduced.
The BRC said business rates had “a material impact” on two-thirds (67 percent) of store closures in the past two years, and warned the impact would be “devastating” if no business rates reform is agreed.
Eighty-five percent of retailers said business rates are an ‘extremely’ or ‘very important’ issue for their businesses when opening or closing stores, while 25 percent of stores paid more in business rates than in rents.
Given the multiplier of 51.2 percent, the rates liability should be approximately half of the rent paid, the BRC said.
BRC warns of ‘devastating’ impact of business rates
Key recommendations in the BRC’s report include cutting the multiplier to its original rate of 35 pence fixing the system of transitional relief; introducing an ‘Improvement Relief’ to ensure that rates bills do not rise immediately as a result of investment in a property; and reforming the Valuation Office Agency to ensure accurate valuations and faster processing of appeals.
Helen Dickinson, the chief executive of the BRC, said the report “underscores the urgency of fixing the broken business rates system, which currently hold back new jobs and investment”.
“Given the retail industry contributes almost 100 billion pounds to the economy (Gross Value Added) and employs over three million people spread across the country, it has a vital role in both the UK’s economic recovery and the government’s levelling up agenda,” she said.
The BRC estimates that one in seven shops in the UK is currently shuttered, and warned it is “essential that action is taken, or else it will be our local communities and high streets which suffer the consequences”.
“The government needs to bring the burden down and take action to ensure that the system reflects property market values more quickly,” Dickinson said.