​Fix UK’s ‘broken’ business rates system or many more stores will shut - BRC

By

Nigel TAYLOR

Published
Sep 20, 2021

Britain’s “broken” business rates system needs urgent reform otherwise over 80% of bricks-and-mortar retailers could permanently close stores, the British Retail Consortium (BRC) warns.

According to a survey, a massive 85% of retail businesses said business rates were a key issue, with 83% saying that they would be ‘likely’ or ‘certain’ to have to close some stores if the government’s upcoming review didn’t lead to lower payments.

Business rates also had a material impact in 67% of store closures in the past two years, the survey also found.

The trade body claims business rates have grown disproportionately compared with other levies and unfairly punish businesses with a physical presence while sparing their online rivals. It’s calling on ministers to cut business rates to the same level they stood at in 1990 when they were introduced, as well as an overhaul of how properties are valued to ensure “accurate valuations”.

Business rates have grown to 51.2p in every £1, from 34.8p when rates were first introduced in the 1990s.

The BRC noted that retail accounts for more than three million jobs across the UK and drives about £400 billion in consumer spending a year. The sector pays 25% of business rates, leaving an £8 billion bill for retailers across the country.

The government granted business rates relief during the pandemic, but bills are still based on values from April 2015 and don’t reflect how property values have slumped during coronavirus lockdowns. Rates also don’t reflect a business’s sales or profitability, the BRC noted.

The government is due to release the findings of a what it has described as a “fundamental review” of business rates this autumn.

Helen Dickinson, chief executive of the BRC, said that the group’s report “underscores the urgency of fixing the broken business rates system”. 

She said: “The government needs to bring the burden down and take action to ensure that the system reflects property market values more quickly. This should include a cut in the multiplier rate, returning it to its original rate of 35%.”

The BRC is also calling for the government to introduce an “improvement relief” that would ensure rates bills do not rise immediately as a result of investment in a property, and to reform the government's Valuation Office Agency. 

It added that one in four stores pay more in business rates than in rent, despite the tax being designed as a proportion — known as a multiplier — of a property’s value.