Blog: Government should listen to retailers on business rates

Retailers’ fears have been realised as today’s inflation rise of 2.6% could lead to an extra burden of £175m in business rates costs.

While the £175m potential cost is slightly down on the British Retail Consortium’s original forcast of £200m, it is such a small difference. The £175m burden will hit retailers who are already struggling following two consecutive years of rates increases.

Retailers have told Retail Week that business rates are the biggest issue they face currently, as the 4.6% increase in 2010 and then a further 5.6% increase last year have hampered growth in an already difficult trading environment.

Top name retailers have said that restricted cashflow under the current conditions has meant they have been unable to open stores in certain areas, have had to slow down store opening programmes meaning less job creation and employees’ salaries have been impacted.

Some have even revealed that rates in certain areas are actually higher than the rents, which is a clear indication that the current system of calculating business rates is not working.

Indeed, it is possible that the rates increases have pushed some smaller retailers over the edge, and certainly have not helped support those that we have witnessed collapse into administration this year, putting thousands of jobs at risk.

This is why, with the British Retail Consortium, Retail Week is calling on the Chancellor to freeze business rates when he makes his Autumn speech in December rather than subject the retail sector to further pressure through further costs.

Measuring business rates changes against the September RPI rate is also seen by observers as random and unpredictable. A fairer calculation is necessary when one number can cause such damage to businesses.

Yesterday, the BRC wrote to the Financial Times explaining that another rise in business rates would mean more empty shops on high streets and fewer employment opportunities, particularly for young people.

The retail sector is the largest contributor to the total business rates pot and is one of the largest employers of young people.

If the Government wants the economy to grow and the private sector to help job creation then it is time they rewarded the hard work of UK businesses by allowing them the breathing space to drive growth, provide more jobs and to innovate.