Five leading trade bodies 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 will be saddled with an inflation-busting 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.’
Business rates remain one of the biggest pressures on the
viability of tens of thousands of shops, hospitality businesses,
and pubs. The tax was introduced in 1990 at a rate of 35p in the
pound, and has since swelled to 51.2p (or 49.9p for small
businesses) – making the UK the most expensive place in Europe
for such property taxes. This constant rise has been one factor
behind the closure of tens of thousands of shops, restaurants and
pubs over the last five years.
The five trade bodies represent businesses in every part of the
UK, employing 6.5 million people. Together they invest over £25
billion 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 that the 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 £400m 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.”
Kate Nicholls, Chief Executive of UKHospitality,
said:
“The significant increase in business rates in April will affect
two-thirds of hospitality’s trade and will be yet another
contributory factor to businesses reducing trade, diverting cash
earmarked for investment or, at worst, closing for good.
“Revising the planned increase down to the forecasted rate of
inflation in April would more accurately reflect the current
economic circumstances and demonstrate that Government is
listening to the concerns of businesses.”
James Lowman, Chief Executive of the Association of
Convenience Stores, said:
"Ongoing support with the cost of business rates is crucial for
incentivising investment in local high streets and shopping
parades. While the extension of business rates relief announced
at the Autumn Statement was a positive step, retailers are still
bracing for a steep increase in rates come April. Such an
increase poses a significant burden on businesses already
contending with a challenging economic landscape. Adjusting the
rate increase to reflect April’s CPI could bolster the continued
growth of the £600 million annual investment that local
convenience stores contribute to their communities, enabling them
to invest and grow.”
Andrew Goodacre, CEO of the British Independent Retailers
Association, said:
“The retail sector, especially the non-food sectors, are very
fragile with weak sales and rising costs. The last thing we need
in April is an increase in business rates higher than the current
rate of inflation for those retailers who do not qualify for the
retail discount.”
Emma McClarkin OBE, Chief Executive of the British Beer
and Pub Association said:
“Larger pubs which are subject to the standard rates multiplier
face a 6.7% business rates increase this April which is why
capping business rates increase is one of our principal asks of
the Chancellor when he announces the Budget next week. Last
year 530 pubs were forced to close, and we fear that this year
another 500-600 may shut their doors for the last time if they
are overwhelmed by the unprecedented cost pressures facing the
sector. Capping business rates, alongside a cut to beer
duty and reduction to VAT, will go a long way in helping to
mitigate these pressures and help keep the price of a pint
affordable.”
-ENDS-
Find the letter here.
