C-store specialist the Co-op has backed the controversial government plans to increase business rates for supermarkets and department stores, saying it will “support local shops”.
A spokesman for the Co-op told Retail Week that it supported the widely trialled plans by chancellor Rachel Reeves to overhaul business rates at the autumn Budget by introducing a surcharge on large retail premises to raise £1.7bn to reduce rates for smaller stores.
The spokesperson said: “At Co-op, we welcome the government’s plans to reform the business rates system and support the local shops that are the heartbeat of communities across the country. As the UK’s leading convenience retailer, with a presence in every postal area, we expect the reforms to benefit around 92% of our own store estate.
“More broadly, the government has estimated that 98% of shops across England will benefit. That is a vital step forward. As we look ahead to the autumn Budget, it is essential that these reforms are delivered in full and on time.
“Any delay or change risks further harm to high streets at a time when many businesses are already under pressure. Supporting a healthier high street must be a long-term priority, not only for retail but for jobs, local services and the future of our communities.”
While the Co-op has over 2,500 stores across the UK, the vast majority of its convenience estate stores would be roughly sized between 2,000 sq ft to 3,000 sq ft and fall under the new proposed £500,000 rateable value threshold, and so would actually benefit from Reeves’ proposed changes to business rates.
By comparison the average UK supermarket as operated by the likes of competitors such as Tesco, Sainsbury’s, Asda and Morrisons would be anywhere between 30,000 sq ft and 50,000 sq ft.
Marks & Spencer have led the charge against the proposed changes, warning it could lead to shop closures and job losses.
“Given larger retailers are often anchor tenants on the high street, taxing them to support smaller stores is a false economy,” M&S said. “If larger shops close, smaller shops suffer.
“The proposed reforms could therefore accelerate the decline of the high street by encouraging retailers to close larger high street stores”.
Other large retailers such as Asda, Primark, Tesco, Sainsbury’s, Morrisons and Kingfisher have all also, privately at least, spoken out against the proposed changes as well, which they say will affect over 17,000 stores in the UK.
The British Retail Consortium has always warned that an increase in business rates tax could send inflation soaring again, due to the fact that supermarket businesses operate on razor-thin margins.
“Food inflation is rising again, putting pressure on the cost of living for millions of households,” BRC chief executive Helen Dickinson warned.
“The situation for customers could become a lot worse if thousands of supermarkets and other large shops are landed with the government’s new higher business rates multiplier. If we want to support the high street and avoid higher prices for customers, the government must ensure no shop pays more as a result of the business rates reforms.”
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