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Editor’s Comment: Beales is a wake-up call on business rates

Kirsty McGregor

Over the 139 years since its first branch opened in Bournemouth, Beales has weathered two world wars, several recessions and going from private to public ownership and back again.

Beales Bolton

But on Monday the independent department store chain finally succumbed to the perfect storm of weak trading conditions and high business rates, and collapsed into administration, putting thousands of jobs at risk. 

The optimist in me hopes that the high-profile failure of such a local high street institution will act as a wake-up call for the government, and prompt ministers to seek effective ways to stimulate trade, including addressing the business rates burden once and for all. If a domestic airline is worthy of government support, why not retail – one of the nation’s biggest employers?

Already urgent, the need to address the cost of bricks-and-mortar retailing is becoming critical as more and more businesses edge towards financial ruin. 

Beales CEO Tony Brown has been very clear about what went wrong, labelling business rates a form of “lunacy”. In December, Frasers Group CEO Mike Ashley warned he would be forced to shut more House of Fraser stores if business rates are not reformed quickly, emphasising that this meant within ”months, not years”. 

Even high street success stories are ramping up the pressure. In our interview this week, JD Sports Fashion executive chairman Peter Cowgill points out the impossibility of stimulating bricks-and-mortar trade under the current tax framework. 

Back in November, at the height of their campaigning, the Conservatives pledged to undertake another review of business rates if elected. At the time, one Drapers reader argued that, with Brexit looming, the government had neither the will nor the time to resolve this issue. And yet this is not something retailers, landlords or local councils can remedy themselves: the government must take action to reform the system.

The government has previously argued that a property-based tax is simpler, and therefore preferable to proposed alternatives. But modern-day retailing is complex – most businesses trade across multiple channels, and the cost base of bricks-and-mortar retailing must be addressed.

Two viable proposals to explore are basing the tax on retailers’ total turnover in store and online, or scrapping business rates altogether in favour of a wider value-added retailer tax. Either way, the decision must afford high street stores the opportunity for a sustainable future. 

Meanwhile, let’s hope that Beales – which was originally known as the JE Beale Fancy Fair & Oriental House, and holds a special place in the hearts of Bournemouth locals – can find a way to survive. 

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