The British Retail Consortium (BRC) maintains that more than 80,000 shops across the UK could close within two years without a major overhaul of business rates, as thousands of retail premises may not be able to afford to renew their leases in 2017.
According to research from the BRC, some 60 per cent of high street stores will be in this position, which could jeopardise the jobs of up to 800,000 workers. In fact, the Consortium says, even in the “best case scenario”, there will be 8,073 fewer shops in two years’ time, putting 80,000 jobs at risk.
Chancellor George Osborne promised a major overhaul of the business rates system in last year’s Autumn Statement and agreed to deliver the Government’s findings from its review by next year’s Budget. The BRC has therefore conducted this study as part of that review.
There have been growing concerns about the burden of the tax, which last year brought £28bn into the Exchequer, and the theory that it disproportionately punishes retailers with ‘bricks and mortar’ shops across the country.
In its report, the BRC calls business rates a ‘tax on growth’ and says that they are an anomaly that ‘stands out in an otherwise moderate tax regime’. However, it goes on to say that the Government can prevent store closures by putting in place both short and long-term deliverables and fundamental reform by 2017, beginning with a road map for business taxation.
According to the report, the current system is unsustainable and requires immediate action. The BRC is therefore urging the Chancellor to extend relief for small businesses, scrap the annual inflation-linked increase in the tax and conduct valuations of property every three years instead of every five.