The British Retail Consortium (BRC) has called on the Government to reform business rates and freeze them for two years pending a wider discussion on business taxation.
According to the BRC, the current business rates system is unsustainable, and retail bears the brunt of it. Retail is the UK’s largest private sector employer, making up five per cent of the economy and yet it pays almost 25 per cent of the overall business rates bill every year.
The BRC calls this £7 billion annual bill “a disproportionate burden”, which is leading to decisions to close stores, and this is getting in the way of modernisation and reinvention of the UK’s high streets.
As the trade body points out, there are almost 2,500 fewer retail stores in the UK than there were just three years ago. Meanwhile, since 2014, there have been more than 3,200 retail insolvencies. Industry profitability is also falling, with net profit down to two and a half per cent from four per cent five years ago.
Therefore, the BRC argues for a “fundamental reform” of the business rates system, which it says should be considered as part of a wholesale modernisation of business taxation.
If business rates were to be frozen for two years, the BRC has said it would take some of the cost pressure off retailers and allow time for dialogue between the Government and industry to help develop a proposal for a modern business taxation system.
A spokeswoman for the BRC said that the current business rates system is “not fit for purpose”. She added that retail shoulders far more than its fair share of the bill, which is leading to store closures.