Four in five retailers face store closures unless the government reduces the business rates burden, a BRC report has found.
The report, Retail, Rates and Recovery: How business rates reform can maximise retail’s role in levelling up, was published ahead of the Government’s Fundamental Review.
The key findings from the survey are:
83% retailers say it is ‘likely’, ‘very likely’ or ‘certain’ that they will close shops if the business rates burden is not reduced as a result of the Fundamental Review;
85% of retailers say that business rates is an ‘extremely’ or ‘very important’ issue for their businesses when opening or closing stores;
In two-thirds (67%) of store closures in the past two years, business rates had a material impact in the decision-making process; and
25% of stores paid more in business rates than in rents. Given the multiplier of 51.2%, the rates liability should be approximately half of the rent paid.
The report makes a number of essential recommendations aimed at encouraging investment and securing the viability of shops and high streets, including:
Cutting the multiplier to its original rate of 35pence in the pound (35%);
Fixing the system of transitional relief, which cost retailers over £500m between 2017 and 2020;
Introducing an ‘Improvement Relief’ to ensure that rates bills do not rise immediately as a result of investment in a property; and
Reforming the Valuation Office Agency to ensure accurate valuations and faster processing of appeals.
Helen Dickinson, Chief Executive of the British Retail Consortium, said: “Given the retail industry contributes almost £100bn to the economy (Gross Value Added) and employs over three million people spread across the country, it has a vital role in both the UK’s economic recovery and the Government’s levelling up agenda.
“This report underscores the urgency of fixing the broken business rates system, which currently hold back new jobs and investment. With one in seven shops currently shuttered, it is essential that action is taken, or else it will be our local communities and high streets which suffer the consequences.”