Retailers will have to pay a further £175m in extra costs if next year’s business rates are based on September’s Retail Price Index (RPI), the British Retail Consortium (BRC) has warned.
Rates will increase by 2.6% next April if they continue to be tied to RPI.
The BRC has said this rate would “seriously impede retailers’ ability to invest and create jobs, especially for young people”.
It is calling on the government to freeze business rates next year as part of its Fair Rates for Retail campaign in collaboration with Drapers’ sister magazine Retail Week.
Director Stephen Robertson said: “This RPI announcement reveals the scale of the potential damage to our high streets that will follow if the government follows previous practice and translates it directly into next April’s rates increase.
“The retail industry is the UK’s biggest private sector employer, providing crucial first jobs to a million 16-24 year-olds. Expecting retailers to bear a huge rates hike for the third year running can only lead to fewer chances of work, less investment and more troubled high streets.”
Roberston added: “The government must recognise that retail has already contributed its fair share to the Exchequer and freeze business rates in 2013. It also needs to reform the mechanism for setting future increases so that it is fairer and less volatile.”
The campaign, which was launched in September, also calls on the government to introduce a fairer, more sustainable formula for working out business rates and favours basing increases on the annual average of the Consumer Price Index (CPI).
In 2011 business rates rose by 4.6%, and by 5.6% in 2012, which has meant a cumulative increase of more than £500m.