BRC opposes tooth & nail 'Business Rate Supplements Bill'

09 Jan '09

3 min read

Government proposals could push the beleaguered retail sector's business rates bill up to £7 billion by 2010/11.

With the second reading of the Business Rate Supplements Bill due to take place today (Monday 12 January) the British Retail Consortium (BRC) is publishing a study showing that annual increases, business rates revaluation, loss of empty property relief and business rates supplements could add £1.6 billion to the £5.45 billion retailers paid in business rates in 2007/2008.

This is equivalent to the average salaries of over 100,000 retail employees. The BRC research shows that retail is more property-dependent than other business sectors and so more exposed and more sensitive to property cost increases.

Retailers already pay 25 per cent of business rates despite representing only 8 per cent of Gross Domestic Product. With BRC overall retail sales figures for December - due out tomorrow (Tuesday 13 January) - expected to be weak, a number of individual retailers reporting poor performances and 35,000 – 40,000 retail jobs likely to have disappeared within a few months of Christmas, the BRC is calling for an immediate freeze on all new business rate burdens and the reinstatement of empty property relief.

Stephen Robertson, British Retail Consortium Director General, said: “Many retailers are struggling with the triple whammy of falling sales, crushed margins and rising costs. The Government must revise its plans to impose a range of extra burdens, which can only increase the pressure on retailers and destroy more of the UK's three million retail jobs. “Retailers are crucial to livelihoods, customers and communities. We don't expect handouts but we don't want further handicaps.”

The £1.6 billion increase in, Government-imposed, retail property costs comprises:
Empty Property Rate Relief – abolished in April 2008. Even allowing for the temporary increase in the threshold at which empty property becomes liable for business rates announced in the 2008 Pre-Budget Report, this will cost retailers £115m a year. The Secretary of State, Hazel Blears should use the powers she has to reintroduce 50 per cent relief to respond to prevailing market conditions.

Business Rates Multiplier – in normal circumstances business rates are increased each year in line with the previous September's RPI inflation. Last September RPI was five per cent, an unrepresentative seventeen-year high. At this rate, retailers will be forced to pay out an extra £250 million a year from April 2009 on top of the £210 million added to their business rates bills in the current financial year. The Government should not implement any business rates increase in April 2009.

Business Rates Revaluation - using April 2008 rental values as a basis for business rates from April 2010 is unjust. The property market has entered uncharted territory since April last year with unknown variations between different localities and business property types. Revaluation now will produce great unfairness. This will cost retailers an extra £900 million in 2010/11. The Government should immediately announce it will postpone revaluation until stability returns to the property market.

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