Business Rates Hike to Hit Hard

Retailers urge Osborne to reconsider rates
By Samantha McClary | Estates Gazette | 27-02-2012 | 13:25 |

Business Rates Increase: More Pressure on Overheads?

A group of Britain's leading retailers and landlords have written to chancellor George Osborne demanding he reconsider the government's 5.6% hike in business rates - the highest rise in more than 20 years.

Retailer and landlord body BCSC, acting on the group's behalf, is calling on the government to increase rates in line with Bank of England's consumer price index inflation target of 2% and not September's RPI of 5.6%, which fell to 3.9% by January this year.

The letter has been signed by Land Securities, JD Sports, Capital Shopping Centres, Kingfisher, Primark, British Land and Boots, among others.

BCSC warns that the proposed rise poses a "clear risk of more retail insolvencies" leading to higher unemployment and more empty shops blighting our high streets as companies look to cut operating costs to ensure their survival.

Chief executive Michael Green said: "While the government is giving people a helping hand by encouraging local authorities to freeze council tax, it seems to think businesses are a bottomless source of cash. But hiking business rates will have wider social consequences than simply causing retailers to take a hit on their profit margin.

"The chancellor should be under no illusion that jobs will be lost and consumers will be hit in the pocket if this unprecedented rise goes ahead."

Retailers pay around £6bn a year to the Treasury and many report their margins are under huge pressure, with operating costs for the sector and especially small and medium sized firms at a historic high as a proportion of their overall turnover.

BCSC President Peter Drummond added: "To increase business rates by the highest level in 20 years at a time when retailers are facing the toughest struggle in a generation is madness. This government has shown it recognises the challenges faced by commissioning the Portas review. Now it's time to back up those words with action.

"Business rates are a tax on high streets, hitting retailers who invest in our towns and cities hard in comparison to online-only retailers."

samantha.mcclary@estatesgazette.com