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Business rates reprieve will be 'purely academic', says BRC

Any business rates reprieve linked to lower inflation rises would be “purely academic”, the British Retail Consortium has warned.

The measure of inflation used to calculate annual business rates rises Retail Prices Index is expected to be at its lowest rate since 2009 in September, according to analysts at consultancy Capital Economics. They predict RPI will increase by 0.7% this year, compared with 2.3% in September last year.

However, BRC external affairs advisor Bryan Johnston said any benefit from this would be countered by dramatic increases in rateable values in 2017, which will hit retailers in the Southeast and London hardest unless the system is overhauled.

“In our discussions with retailers and other retail organisations, it is clear there are going to be huge changes and some will see a 90% change across their portfolios,” he said.

This week, the BRC reiterated its view that an overhaul of the business rates system would help high streets to flourish against the trend of falling footfall.

Footfall to high streets and shopping centres fell 2.2% and 2.5% respectively in July compared to the same month last year, according to data collected by BRC and research firm Springboard. Footfall to retail parks increased 3.1%.

However, the national town centre shop vacancy rate was 9.8% last month, the lowest rate since the report began in July 2011 and down from 10.2% in April this year.

“No matter how successful high streets are in re-inventing themselves, if they can’t deliver increased footfall we could easily see vacancy rates climbing again,” said Helen Dickinson, director general of the BRC. “The footfall decline has slowed this month, but it still has a way to go.”

She said the numbers indicated that British high streets are beginning to solve their space problem but have yet to drive up shopper numbers.

“This is a delicate balancing act and could easily be derailed. Reducing the burden of business rates would give high street operators the opportunity they need to allow more of them to finally flourish,” she added.

Greater London was the only region to report positive footfall growth of 0.4%. Footfall in Northern Ireland and Wales fell by 4.5% and 4.4% respectively in July, while it was unchanged in Scotland at 2.4%.

Chancellor George Osborne committed to a full structural review of the business rates system to report by Budget 2016 in his Autumn Statement on December 3. This will run alongside the ongoing review of business rates administration.

@Tara_Hounslea

Johnston, who has been liaising with the treasury on the review on behalf of the BRC, said: “Will they go far enough? is the question. We feel that more could be done in terms of listening to the industry at this stage.”

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