Next chief executive Lord Simon Wolfson has said the government’s planned review of business rates is unlikely to have a big impact on multiples with large store estates, as the UK “can’t afford to raise less money from taxes”.
The review, which was detailed in yesterday’s budget, will look at how businesses in England use property, what the UK can learn from other countries about local business taxes and how to modernise the system.
Chancellor George Osborne also confirmed the government has agreed a series of pilots to allow Greater Manchester, Cheshire East, Cambridgeshire and Peterborough to keep 100% of the additional growth in their business rates to reinvest locally. These pilots will launch in April.
However, Wolfson said larger retailers will end up paying the same amount overall as some high streets will be “winners” and others will be “losers”.
“I don’t think we will raise any less money from business rates overall. They will review each location and make sure they are being charged fairly, but the government can’t afford to raise less money from taxes.”
He added: “The rate will be adjusted for underperforming high streets as well as overperforming high streets, so if you have lost of stores it will be neutral as a group. There will be winners and losers.”
Wolfson suggested that, if rates are reduced, the money will be taken from elsewhere, which will affect the consumer and, in turn, sales.
The UK needs to work on “liberating the housing market” to see growth, he argued. “We need to worry more about improving the supply side of the economy. Proper planning of high streets needs to be tackled aggressively and the housing market needs to be liberated; that’s far more important.”
He added that the election is unlikely to affect consumer spending. “In the past the election has not hit consumer spending other than on polling day. The uncertainty comes from the measures that are taken after the election.”
This morning Next reported a 12.5% rise in underlying pre-tax profits to £782m for the year to January 31, but Wolfson remained cautious about the outlook for 2015 and 2016.