The chancellor has been criticised for failing to address the burden of business rates in today’s Autumn Statement, as forecasts suggest next year is going to be even more challenging with slower growth and rising inflation.
“This was a statement of stocking fillers rather than expensive presents,” said British Retail Consortium chief executive Helen Dickinson. “While the outlook is not as bad as some predicted, it could have been in the wake of the EU referendum. The next few years will be challenging for the industry.
”Shoppers’ spending power is falling and retailers will almost certainly have to absorb some of the underlying cost increases into their margins, rather than fully pass them on. As a result, retailers are likely to see slower volume growth at lower margins next year.”
She said chancellor Philip Hammond had missed an opportunity to keep up the momentum behind the reform of the business rates system by failing to bring down the burden of rates for retailers.
“The retail industry will be encouraging the chancellor to look again at measures to help alleviate the pain felt on the high street,” she said. “Despite recent reform measures, retailers are expected to pay £550m more in rates than they are today.”
Edward Cooke, chief executive at retail property body Revo, meanwhile said that while some may welcome the lowering of the transitional relief cap, failure to reduce business rates could send some firms to the wall.
“The chancellor failed to mention anything about reform of the opaque appeals system, which research shows could cost small and medium-sized businesses almost £700m,” he said.
Keith Cooney, national head of business rates at property services firm Knight Frank, agreed: “The government is risking a spate of corporate insolvencies by failing to significantly reduce business rate increases over the next two years.
“Following the rating revaluation, corporates face increases of up to 43% and 32% over the next two years, which will place the future of some in jeopardy.”
He welcomed the government’s move to support SMEs, but said the commitment to keep business rates policy changes fiscally neutral is shifting the balance too far the other way.
He said: “Elevn per cent of businesses contribute 72% of the £29bn generated for the Treasury every year. The cut in corporation tax is an eye-catching move to attract businesses to the UK, but the government should be doing far more to support businesses already here.”