Up to 100,000 jobs on the high street are in jeopardy if the Labour party proceeds with a tax reform, according to industry leaders. Concerns have been raised about the potential closure of 400 major British retail outlets, including supermarkets and department stores, if changes to business rates are implemented. The British Retail Consortium (BRC) reports that there are approximately 4,000 large stores with a rateable value exceeding £500,000, which could be affected by the proposed adjustments. Should these at-risk stores shut down, it could result in a significant loss of jobs and a decline of over £100 million in business rates revenue for local councils annually.
During a recent meeting with store executives, Chancellor Rachel Reeves was urged to revamp the business rates system urgently. Jason Tarry, the chairman of John Lewis, emphasized the critical need to address the high rates bills that stores face, ranking second only to wages in terms of expenditure. The BRC’s Chief Executive, Helen Dickinson, highlighted the role of large stores in attracting footfall to high streets and supporting surrounding businesses. She cautioned that forcing 400 more large stores into a higher tax band could lead to substantial job losses, further contributing to the decline of high streets and diminishing government revenue.
The BRC pointed out that while the retail sector makes up 5% of the economy, it bears over 20% of all business rates expenses. Large stores, particularly those with a rateable value above £500,000, shoulder a significant portion of the business rates burden, impacting their operational costs and viability. The proposed reforms aim to alleviate pressure on smaller retailers, pubs, and hospitality establishments.
In response to the industry’s concerns, the Treasury indicated plans to introduce lower tax rates for retail, hospitality, and leisure properties starting in April. These reduced rates will be funded through a higher tax on less than 1% of the most valuable business properties. The Treasury emphasized the long-term sustainability of the new tax scheme and its commitment to supporting small businesses and fostering economic growth.
Chancellor Rachel Reeves is exploring options to eliminate obstacles for small businesses to promote economic growth. The Treasury is assessing changes to the current business rates relief system to encourage expansion and investment by small enterprises. The goal is to create a more favorable environment for business development and enhance economic opportunities.
Various industry stakeholders, including UKHospitality, have welcomed the government’s efforts to reform the business rates system, aiming to address longstanding issues that have disproportionately affected certain sectors, such as hospitality businesses.
