Mike Ashley’s Frasers Group, formerly Sports Direct, has called for an “urgent fundamental review” of business rates to prevent “desolate” high streets in a letter to the prime minister Boris Johnson.
The letter, signed by chief financial officer Chris Wootton, condemns the current transitional relief which “results in stores paying the incorrect amount of rates”.
“Those stores that are transitioning upwards and benefiting from not paying as much as they should and paradoxically those stores transitioning downwards are paying far too much, and inherently these are the stores in desperate need of support”, it reads.
Frasers Group recommends a single approach to transitional relief regardless of property size, and one that results “in the correct rates bill being reached at the end of the transitional period”.
According to the retail group, the current system penalises investment in stores, which leads to increased rateable values and rates bills. Therefore it suggests “a moratorium of two to three years on increases in rateable values based on investment in stores”.
Without these changes, the retail group said: “We will no doubt, unfortunately, see further large retail failures in the New Year, and as we have noted publicly we can no longer sustain our current portfolio of House of Frasers and have begun close down procedures in some cases.”
The letter added: ”We would note that it is the medium and large stores that drive footfall onto our high streets which inherently benefits the smaller stores. When the key anchor stores fall away from the high streets become desolate and smaller stores close as well, improved rates relief or not, without footfall these smaller stores cannot survive.”
The changes proposed would likely see some Sports Direct and Flannels stores pay increased rates. However, it would also reduce rates on House of Fraser stores that are currently paying zero rent, according to the group.
Wootton stressed the “urgency” of this suggested review and offered to speak directly to the prime minister in order to find a resolution.
Ashley voiced concerns over the current business rates system at the Group’s half-year results in December, saying a failure to reform could lead to the closure of loss-making House of Fraser stores within “months”.