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Inaction on business rates 'could see 80,000 stores close'

Failing to overhaul the business rates system could lead to the loss of more than 80,000 stores by 2017, the British Retail Consortium has warned.

The worst case scenario from the BRC figures amounts to 80,000 stores and 800,000 jobs, while the ‘best case’ would be 8,073 store and 80,000 jobs lost, based on an average of 10 jobs per store.

The findings, reported by The Telegraph, are based on retailers not renewing their leases on the 60% of stores whose rent agreements expire by that date.

It suggests that the rising cost of business rates could be a key factor in the decision for retailers to renew their rental agreements.

There is expected to be a spike in rent deals expiring over the next two years as retailers scrambled to open stores on 25-year leases between the 1980s and 1990s.

The BRC said business rates are “a tax on jobs and growth”.

It said: “The government can prevent store closures by putting in place both short-term deliverables and fundamental reform by 2017, beginning with the government’s vision and road map for business taxation.”

It is calling for short-term and long-term recommendations including extending the relief for small businesses, removing the annual inflation-linked increase in the tax and holding property revaluations every three years rather than five.

By the 2016 budget, It also wants the government to confirm if the tax will continue to be linked to property in future, or if it will be linked to sales, profit, margin or employment instead.

Pre-tax profits at the biggest retailers have fallen 32% since 2008, but their business rates bill has increased by 27%, the newspaper reported. Business rates account for 45% of the taxes paid by retailers today, up from 32.5% in 2005.

@Tara_Hounslea

Readers' comments (1)

  • Whatever business rates are, failing businesses use them as an excuse to justify the situation they are in. They know what their rates are before they take a property on, so they are fully aware of what their charges will be. The government always cops the blame.

    Maybe it's the case of Businesses simply biting off more than they can chew. If rates are too high, move to another area where costs are lower and/or put your prices up. It's not rocket science.

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