Retail industry body changes tune on rates

 
Kasmira Jefford
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THE BRITISH Retail Consortium (BRC) has abandoned its call to the government to freeze business rates, urging instead for next year’s rates uplift to be capped at two per cent.

In a letter to retailers yesterday, Helen Dickinson, the director general of the industry body, said it would be “unrealistic” to ask HM Treasury to freeze business rates because it would have to be applied across all sectors and not just on retail property.

A nationwide freeze would cost the Treasury almost £1bn in the first year.

“We recognise that almost £1bn a year is a big ask. And even if there was a freeze, what has become increasingly apparent is that it wouldn’t be enough to address the significant issues that business rates are causing to local jobs and communities,” director general, Dickinson, said.

“What needs to happen is reform of business rates, and that is now our focus,” she added.

The BRC said until a long term solution for business rates was found, it agreed with the CBI (Confederation of British Industry) stance of a two per cent cap on rates.

Business rates, taxes retailers have to pay on commercial property, have escalated from £5.5bn in 2007 to over £7bn in 2012.

Current rates were implemented in 2010 and are still based on property valuations carried out in 2008. They are also linked to annual inflation and rose by 2.6 per cent in April, adding an extra £175m to retailers’ bills. The government was due to carry out a revaluation in 2015 but this is now expected to be pushed back to 2017.

This means retailers will have to pay rates based on 2008 peak property rents for another four years.

Industry leaders including Sainsbury chief executive Justin King have repeatedly called for a reform of rates, labelling them as a “historical anachronism” based disproportionately on property rather than more relevant measures of a business’s performance like sales.

Retailers have called for a rebalancing of the tax to address the rise of online retailing, and help ease tough conditions on the high street.