Independent retailers have applauded the call by the Business, Innovation and Skills Committee (BISC) for a major overhaul of the business rates system and backed its suggestion that rates should be based on turnover rather than property value.
In a report published on Tuesday, the BISC demanded a “fundamental reform” of the rates, which have long been blamed for crippling retailers.
Its recommendations include considering whether retail taxes be based on sales rather than the value of a property, if retail should have its own system of business taxation, and how often revaluations should take place. It also recommended a six month rates amnesty for businesses occupying empty properties while a review takes place.
George Graham, co-owner of designer retailer Wolf & Badger in Notting Hill, London, said he commended the move.
“I would also like to see a thorough review of whether there is a need to have a business tax based on physical property at all. The current system largely favours national retailers with multiple small sites as opposed to independent retailers – the true lifeblood of the high street,” he said.
Ian Hopkins, director of six-store Pulp in northern England, agreed, saying the system was “out of kilter with the economics of retail today”.
Hopkins also said he backed the BISC’s interest in relating business rates to turnover. “A rate based on turnover would help retailers and give councils an incentive to help retailers.”
Business rates are regularly cited for the demise of independent retailers, with southern mini-chain Base Retail and kidswear shop Ten Little Monkeys in Wilmslow, Cheshire, blaming excessively high rates for the collapse of their respective businesses in recent weeks.
Figures released in the Grimsey Review, an independent study of the high street led by former Iceland boss Bill Grimsey last September, found that while bricks-and-mortar retail sales grew 11.43% in the five years to 2013, business rates jumped 22.51%.
Michael Weedon, deputy chief executive of the British Independent Retailers Association, said: “There is now nobody saying that the rates system is fit for purpose; that argument has been won. Rates amnesties, averaging, more frequent revaluations should all be looked at but they are not fundamental changes. The onus is now on the industry to make the case for actual reforms that can be put in place by an actual elected government.”
Retail campaigner Paul Turner- Mitchell, who was an adviser to the Grimsey Review, said decisive action needed to be taken now.
“While reports are ongoing, businesses are closing. Now we’ll just have to wait for a response from [business secretary] Vince Cable and the Treasury to see whether they have an appetite for a reform.”
In the Autumn Statement, the Government said a cap of 2% would be introduced on business rates from April.
As part of the BISC report, MPs recommended that the Government sheds light on how and how much of the £2.3m allocated to revive high streets in the 12 Portas Pilot towns is being spent.
Turner-Mitchell, who last year submitted Freedom of Information requests that revealed much of the funds remained untouched, said he would soon be unveiling more up-to-date figures showing that the majority of the funds “remain unspent and money had been spent on frivolous things”. He called for accountability on the pilots.