Small shops ‘to pay as supermarkets save £1bn on rates’


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The Independent Online

The Government’s decision to delay a key review of business rates will see the Big Four supermarkets save at least £1bn while small and independent retailers’ bills would remain artificially high, according to new research.

Business rates are calculated based on the rental values from 2008, but because of the recession shops in less prosperous towns have seen rents fall while rates remain the same.

A revaluation was due in 2015 but this was postponed until 2017, with the Government claiming it would provide stability for small and independent retailers.

However, a new report by the former Wickes chief executive Bill Grimsey has found that Tesco, Sainsbury’s, Asda and Morrisons will benefit the most from the delay, saving £1.3bn over two years.

Mr Grimsey told The Independent: “All the evidence suggests that small businesses, many of which are really struggling at the moment, are going to be subsidising the big four supermarkets as a result of the Government’s decision to postpone the business rates revaluation.

“That cannot be right, and it can’t be fair. This is policy that’s helping those with the broadest shoulders and punishing the little guy who is close to  the edge.”

The total rental value of the supermarkets is £2.75bn, according to the Valuation Office Agency, which means they pay £1.3bn in business rates.

Property specialists and rating experts estimate that if a new valuation took place in 2015, their value would be up around 20 per cent, leaving a total rates tax bill of £3.3bn.

The Sainsbury’s chief executive Justin King,  a vocal critic on business rates, has called for an overhaul of the entire system, which he says unfairly penalises bricks-and mortar retailers at the expense of online-only ones.

Mr Grimsey is expected to raise this issue when he appears before the Business Select Committee  later today.