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Editor’s Comment: Business rates need a radical rethink

As the spectre of another general election looms – the second in just over two years – this week we ask the fashion retail industry what policies they think the next government should prioritise. 

Unsurprisingly, a reform of business rates was high on the list.

We haven’t come far in the past two years. Government support is still sorely lacking, at a time when the industry is struggling under the weight of rising costs. As we have reported, redundancies are rife across the high street.

There have been several attempts to sort out the broken business rates system over the past few years, but there is still so much more to be done. 

Last month, the Treasury select committee released a report on business rates in England and Wales, which identified a number of flaws in the current system. It said business rates were still too high, complex and placed an unfair burden on bricks-and-mortar retailers. 

A quick look back at the Drapers website shows countless calls from trade bodies and high street retailers for a rethink of this crippling tax.

This week, the Conservatives pledged to undertake another review of business rates if elected, while Labour and the Liberal Democrats have also pledged reform. 

What complicates these promises is the fact that local councils now rely on business rates for about a third of their revenues. This is what held the government back from making any radical changes to the system following the last large-scale review in 2015.

It seems nobody has the answer. The Liberal Democrats’ radical proposal to scrap business rates in favour of a commercial landowner levy is intriguing, but more detail on how this would work is needed before we can draw any real conclusions. 

The fashion industry is resilient, and many retailers are investing in theatrical new flagships despite the rising costs. The latest opening from Timberland in London heralds a fascinating new purpose-focused approach to bricks and mortar, while Primark’s Birmingham megastore received the highest accolades from the judges of this year’s Drapers Awards.

But if we are to support the regeneration of local high streets, beyond the confines of city centres, we need urgent action on business rates.

 

Readers' comments (1)

  • Kirsty, it's time for Drapers, along with the BRC and senior retailers, to propose a solution rather than harping on about the problem. Government has neither the will nor the time to resolve this issue.

    My proposal is to scrap business rates entirely and replace with a corresponding VAT increase. VAT is the most efficient and simple tax, and applies equally to online and offline sales. I haven't yet heard an effective rebuttal to my proposal.

    What do you propose?

    Unsuitable or offensive? Report this comment

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