Retailers have urged the government to overhaul business rates after a report warned that 100,000 shops could close within a decade, creating ghost towns across the UK unless action is taken.
Following a review from veteran retail boss Bill Grimsey, the British Retail Consortium called (BRC) for rates – a tax on the value of a firm’s premises – to be frozen for two years. The move would provide some relief for a beleaguered sector that has seen more than 20,000 thousand job cuts already this year.
“The retail industry, the UK’s largest private sector employer, makes up 5 per cent of the economy and pays nearly 25 per cent of the overall business rates bill, over £7bn per year,” the BRC said.
“This is a disproportionate burden and is leading to decisions to close stores, while at the same time getting in the way of the modernisation and reinvention of Britain’s high streets.”
Sainsbury’s boss Mike Coupe joined the calls for reduced rates on Wednesday.
After the supermarket chain announced slowing sales growth on Wednesday, Mr Coupe said: “There isn’t a level playing field between online players and traditional bricks and mortar players, and it’s playing out in a very stark way on the high street at the moment.”
He added the government needs to review “total business taxation”. Sainsbury’s paid £560m in business rates last year, 6 per cent of its overall tax bill.
Bricks and mortar businesses have long complained that online firms like Amazon benefit from a tax system that makes physical premises more expensive while allowing multinational online firms to minimise the amount they pay.
Research published by the European Commission in September said that digital businesses with international operations pay 10.1 per cent tax in the EU, compared with a 23.2 tax rate for traditional companies.
On Wednesday, the Grimsey Review 2 laid out a bleak vision of the future for the UK’s town centres.
It predicts 68,000 retail jobs will go this year alone with little sign that things will improve without radical changes being implemented.
It also put forward a range of proposals to reverse the decline including the creation of town centre commissions which would draw up 20-year plans for their respective local areas. At the national level, the review recommends creating a body similar to the Scottish Towns Partnership to support the development of urban centres, as well as a landlord register.
“Our cities, towns and communities are facing their greatest challenge in history, which is how to remain relevant, and economically and socially viable in the 21st century,” Mr Grimsey said.
Other recommendations include the appointment of designers to celebrate the history and character of town centres, half an hour of free parking in high streets, improved street lighting and free public wi-fi.
“Towns must stop trying to compete with out of town shopping parks that are convenient and with free parking. They must create their own unique reason for communities to gather there – being interesting and engaging and altogether a compelling and great experience.”
The calls come as shops across the country face an increasingly difficult financial situation. Besides the rise of online retailers and recent hikes to business rates, they have also been hit with higher wage bills thanks to increases in the minimum wage.
Despite the pay rise for those on the lowest incomes, average wages have barely kept pace with inflation, meaning many retailers’ customers have cut back on spending.
A string of retailers including Mothercare, House of Fraser, Maplin, Toys R Us and Carpetright have shut stores and cut jobs, or gone bust altogether in 2018 so far.
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