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Business rate reform called for as industry reacts to Labour landslide

Image © Westfield Group

As Labour wins the UK general election – with a historic 412 seats compared to 120 Conservatives – the retail industry has once again stressed the need for a business rates overhaul to protect high streets across the country.

During Labour’s campaign, the party pledged to replace the business rate system in England; introduce a specific offence for assaults against shop workers; and reform the “broken” apprenticeship levy.

The new Prime Minister Keir Starmer used his victory speech to promise “change begins now”. The retail industry is hoping that change will come quickly.

Scott Parsons, chief operating officer UK, Unibail-Rodamco-Westfield, said: “This election result is an exciting moment for the country and an opportunity to refresh the relationship between business and government and how they work together to deliver for communities. When it comes to the retail sector, we have two top asks for the new Labour government. The first is to do what no previous government has been able to achieve and reform business rates once and for all, and the second is to abolish tourist tax. 

“Tackling these issues effectively will not only help save our high streets but it will also unlock growth across the UK, allowing us to better compete on the global stage. Labour’s commitment to working with business leaders is refreshing and I invite our new Prime Minister and his team to meet with me on behalf of the hundreds of British and global retail brands at Westfield London and Westfield Stratford City to help turn both asks into a reality.”

Jacqui Baker, head of retail at RSM UK, commented: “While Labour have vowed to scrap the current business rates system, retailers are nervously awaiting the details on how the system will work in practice. As the biggest burden for the sector, retailers are banking on an effective overhaul that makes it fit for purpose once and for all.

“Labour’s vow to clampdown on anti-social behaviour against shop workers will go some way in providing reassurance to staff that they can feel safe at work. Crime is a growing and devastating issue in the sector, so strong measures that deter criminals and make a real difference are urgently needed.

“However, with no mention of tax-free shopping by Labour, hopes for a U-turn are quickly fading. Recent ONS figures show net tourism spending has fallen 9% in Q1 2024, highlighting that the removal of the regime is having a substantial impact. In what seems like an easy win to boost the UK economy, it’s disappointing this isn’t top of the agenda for the new government.

John Webber, head of business rates at Colliers, added: “Given the size of the landslide victory, there should be no excuse for the Labour party to avoid addressing the business rates problem or to introduce significant reform, which will help protect the high street. We urge reform, as opposed to abolition, to ensure local authorities continue to receive the stable funding they need.

“After more than 30 years of mismanagement from successive governments, we now have a multiplier which at over 50p in the pound, means a 50% tax on property occupation, a complicated relief system with business rates deserts in some parts of the country and an appeal system that’s inefficient, lacking transparency and increasingly difficult for businesses to negotiate without an adviser. The current system is just not fit for purpose.”

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