Retail leaders call for action to avoid £400m cost hike
44 retail leaders, representing over one third of the retail industry (by employees), have written to Chancellor Jeremy Hunt MP to call for a freeze in the business rates multiplier to be announced at the upcoming Autumn Statement.
The retail industry pays over £7bn 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.”