The British Independent Retailers Association and British Retail Consortium are amongst five trade bodies who have written to the Chancellor ahead of the Spring Budget, urging him to align the business rates rise in April with the rate of inflation at that point.
Currently, April’s rise is linked to the previous September’s CPI, meaning retailers, hospitality & leisure venues, pubs and breweries face a 6.7% increase.
The letter, signed by the Association of Convenience Stores, British Beer and Pub Association, British Independent Retailers Association, British Retail Consortium, and UK Hospitality, urges the Chancellor to instead use the Bank of England’s Q2 forecast for inflation – currently 2.0%:
“April’s rates rise should be based on April 2024 CPI, rather than the level from seven months prior, when global cost pressures were still keeping inflation high. This would keep our business rates contributions in line with current changing prices, rather than introducing an inflationary rise. It would support our industries as they seek to drive greater investment in villages, towns and cities all over the country,” the letter states.
The five trade bodies stressed that they represent businesses in every part of the UK, employing 6.5 million people. Together they invest over £25bn annually across the country. However, the letter notes the UK has seen “the loss of over 26,000 shops, pubs and brewers and hospitality and leisure venues in the last five years”.
Helen Dickinson, chief executive of the British Retail Consortium, said: “April’s rates rise will be more than three times the expected inflation at that time. This means above-inflation cost increases for businesses, which will put significant upwards pressure on prices, jeopardising the current success in bringing down inflation. The Government needs to fix this anomaly and make sure April inflation is the determinant of April’s rates rise.
“With retail on the line for an additional £400mn in rates, it is inevitable that there will be renewed pressure on retail prices, as well as blocking much new investment in our town and city centres. It is essential that the Chancellor uses the Spring Budget to make this change and give our local communities a fighting chance to thrive.”
Furthermore, the chief executive of M&S took to LinkedIn to call on the UK Government to “help fix the broken business rates system.”
Stuart Machin wrote a blog post on the social media site detailing three things Jeremy Hunt could announce in his Spring Budget on Wednesday that would make a big difference to M&S colleagues and customers.
On the subject of rate rises, Machin wrote: “The total tax rate for retailers sits at 45.7%, compared to just under 40% for the FTSE100 – with retail almost always the sector with the tightest profit margins. The reason for this is business rates. We’re all proud to pay our way and support the country and the communities we serve. But the balance is wrong and is stymying growth.
“So increasing the business rates multiplier by nearly 7% from 1 April – at a time when the Government is looking to tackle inflation, retailers are working hard to offer customers the very best value, and people are struggling with the cost of living – is economically illiterate.
“We need decisive action to reduce the multiplier back to its original level but, at the very least, an adjustment to the current inflationary uplift.”
He also called for change to the Apprenticeship Levy and a return of tax-free shopping. Read the full post here.
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