by More than 70 retailers, including Tesco, Marks & Spencer and Ikea, are lobbying Chancellor Rachel Reeves for a 20% cut in business rates, warning that property taxes could force tens of thousands of shops to close.
In a letter to Reeves coordinated by the British Retail Consortium (BRC), executives are urging the Treasury to introduce a “retail rate corrector” on the levy, a property-based tax charged by local councils and imposed on businesses, including retailers. pubs, factories and corporate offices.
They argue that a 20% cut would help level the playing field for the sector, which they claim pays more than its fair share of tax. Research from the BRC shows that retailers will pay 7.4% of all business taxes, despite accounting for 4.9% of Britain’s total economic output in 2023. They say this has slowed investment and forced retailers to close, impacting local jobs.
According to the BRC, without quick action, 17,000 stores could be forced to close over the next ten years.
“This tax burden has a damaging socio-economic impact on local communities through store closures and job losses – in two-thirds of the 6,000 store closures in Britain in the last five years, the rates law had a material impact on the decision to close,” the letter said .
“The tariffs also hold back the current investments we want to make in wages and upskilling our people, in new and improved stores and in the technology that will support productivity and economic growth.”
The letter – which was signed by M&S CEO Stuart Machin, Tesco UK CEO Matthew Barnes, Aldi’s Giles Hurley, B&Q’s Graham Bell, Costa Coffee’s Nick Orrin and Ikea CEO Peter Jelkeby in Great Britain and Ireland – part of efforts to influence tax policy ahead of the new Labor government’s first budget on October 30.
However, a sharp cut in business rates could be a tough sell as the Chancellor tries to plug a £22bn hole in the public finances.
Figures from the BRC show that the retail sector paid more than £6 billion in business rates last year, meaning a 20% reduction would cost the government around £1.2 billion.
The retail industry has long complained about its tax bill. However, pressure has increased over the past two years as a rise in inflation caused business rates to rise. The UK inflation rate for September – which stood at 6.7% in September 2023 – is typically used to determine the annual increase in business rates.
In the party’s election manifesto, Labor pledged to replace England’s business rates system with a fairer regime, saying the current scheme discouraged investment, created uncertainty and placed an “unreasonable burden on our high streets”. outline what the new system will look like.
The former Conservative government held several consultations on business rates reform but failed to change the system during its time in office.
“Retail has been the golden goose, generating tax revenues far exceeding the size of the sector, but the current situation is not sustainable,” said Helen Dickinson, chief executive of the BRC. “The government must take action to rebalance the system and ensure that all industries pay their fair share. This would in turn lead to greater retail investment in people, places and communities.
“The Budget is the perfect opportunity to lay the foundation for local investments that deliver results for retail customers, deliver results for workers and deliver results for the economy.”
A Treasury spokesman said: ‘The Chancellor has vowed to lead the most pro-growth and pro-business Treasury in the country’s history. Early action has been taken to unlock investment to advance our national mission of growth.”
“The government’s manifesto is committed to a fairer business rates system that levels the playing field between the high streets and the online giants, stimulates investment, tackles vacant properties and supports entrepreneurship.”
