Retailers have welcomed the government’s plans to review the business rates system detailed in full in today’s budget (March 18).
As previously reported by Drapers the review will look at how businesses in England use property, what the UK can learn from other countries about local business taxes and how to modernise the system. The Chancellor George Osborne also confirmed the government has agreed a series of pilots to allow Greater Manchester, Cheshire East, Cambridgeshire and Peterborough to keep 100% of the additional growth in their business rates to reinvest locally. These pilots will launch in April.
Steven Cohen chief executive of young fashion retailer Blue Inc said the review was overdue.
“The existing rates regime is outdated and unfair. There is a significant disparity between etailers and high street retailers compounded by the fact that rates are not linked to revenue or profitability. This has directly led to the demise of large parts of the UK high street. The decision to review the system would breathe life into the high street and create real jobs and spread future prosperity in towns and cities across the UK.”
Colin Temple, chief executive of footwear chain Schuh, said: “A review is welcome as reform is needed. Business rates should be based on turnover as profitability is harder to police. Rates are all about a level playing field, but they are unfair as they have no commercial link. That being said they are unfair for everyone so we are all in the same boat.”
Charles Clinkard, managing director of the eponymous footwear chain said: “I am pleased to hear that business rates will be fully reviewed in time for the 2016 budget. Being cynical I don’t think they will give a lot away but would hope that those of us trading primarily outside London will see some benefit however small. From a business perspective Osborne is putting a little more money in the pockets of those working to hopefully spend or save with the incentive of the first £1,000 interest tax free. All politically motivated no doubt but welcome none the less.”
Simon Poole managing director of menswear retailer and brand Luke was sceptical about how far the review would reach. “Business rates need serious review but the government has reduced contributions to the councils so the last thing they are going to work towards are reductions.”
He added: “Regarding the minimum wage, retail is tough enough; more costs will mean fewer employees ultimately, so there will be fewer people in employment in the end which defeats the object. I am a great believer in letting the market dictate its natural position, with price deflation in real terms in the retail sector the last thing we all need are higher costs.”
It was revealed yesterday (March 17) that the national minimum wage will increase to £6.70 an hour from October, after the government formally accepted the Low Pay Commission’s recommendation.