44 retail leaders, representing over one third of the retail
industry (by employees), have written to Chancellor MP to call for a freeze in the
business rates multiplier to be announced at the upcoming Autumn
Statement.
The retail industry pays over £7 billion a year in business
rates. Without action from the Chancellor, the business rates
multiplier will rise in April 2024, in line with the September
inflation figure – expected to be over 6% - amounting to an
increase of over £400m a year to retailers’ business rates bills.
While retailers are doing all they can to help their customers,
an increase to costs at this level could lead to upwards pressure
on prices, just as shop price inflation has begun to ease.
A recent survey of BRC members showed that 68% of retailers were
‘very concerned’ about the business rates increase, and that all
of them felt it would place some pressure on shop prices, with
69% saying it would place ‘significant pressure’ on the prices
paid by customers. Furthermore, all retailers noted that the
rates increase would hold back investment, including in new shops
and warehouses.
The letter has been signed by 44 leading retailers and notes the
exceptional challenges facing the industry, and the efforts being
made to absorb existing rising costs in the supply chain:
“Retailers have worked hard to absorb as much additional cost
as possible amidst record cost inflation over the past 18 months.
Operating profit margins have significantly contracted as a
result, as the CMA reported in July. This effort is starting to
bear fruit as BRC’s data shows that shop price inflation fell to
6.9% in August, part of a continuing downward trend from a peak
of 9.0% in May.”
Helen Dickinson, Chief Executive of the British Retail
Consortium, said:
“The Chancellor must freeze rates to help keep a lid on
retailers’ already high costs. With shop price inflation having
eased for three consecutive months, it is vital that the
Government does not add to the cost burden and undermine this
progress.
“A £400m rates rise will also cost jobs, harm the economy, and
damage the vibrancy of our town and city centres. While other
business taxes, such as Corporation Tax and VAT, rise and fall
with the movements in the economy, Business Rates must be paid in
full whether firms are making a profit or a loss. This makes
Business Rates the difference between retailers being forced to
close existing stores rather than opening new ones.”
-ENDS-
Full list of signatories:
Aldi, ASDA, B&Q, British Independent Retailers Association,
British Retail Consortium, Booths, Boots, Co-Op, Concept Living,
Currys, Decathlon UK, Deichmann, DFS, Domino’s Pizza Group plc, F
Hinds, Federation of Independent Retailers, Greggs, Harvey
Nichols, Homebase, Horticultural Trade Association, Ikea UK &
Ireland, JoJo Maman Bébe, KFC UK & Ireland, Kingfisher, Lakes
& Dales Co-operative, Lidl, M&S, Majestic Wines,
Morrisons, Mountain Warehouse, The Paint Shed, Retra, Richer
Sounds, Rox, Sainsbury’s, Schuh, Screwfix, SCS, Southern Co-Op,
Tesco UK & Ireland, Topps Tiles plc, Vision Express, Wickes,
The Works.
BRC member survey:
BRC surveyed its members on the impact an inflationary increase
to business rates in April 2024 would have on shop prices and
their investment plans, between 1-31 August 2023.
The results found that:
- 68% of respondents are ‘very’ concerned about an inflationary
increase to business rates in April 2024, with 32% ‘somewhat’
concerned.
- 59% of respondents said that an inflationary increase to
rates in April 2024 would place ‘significant’ upward pressure on
customer prices, with 41% saying it would place ‘some’ upward
pressure on customer prices.
- All respondents said that an inflationary increase to
business rates in April 2024 would hold their business back from
investing in communities, including new shops, warehouses and
offices: decarbonising building stock; and making improvements to
existing properties.
