Thursday 13 February 2020 12:01 am

Retail bosses call for business rates reform in 2020 budget

Major UK retailers, including Debenhams, Sainsbury’s and M&S, have this morning called on the chancellor to take action on business rates reform in the upcoming budget. 

Retail bosses representing some of the country’s biggest high street chains have written to Sajid Javid urging him to outline plans to reform the transitional relief system in the budget on 11 March.

Read more: Experts slam business rates appeals system

The letter, which is also signed by Asda chief executive Roger Burnley, New Look chief executive Nigel Oddy and Greggs boss Roger Whiteside, has called on the government to scrap the process that delays a drop in rates bills. 

It argues that the system has cost the retail industry more than £500m in the last three years, and has forced locations outside London to subsidise the capital’s firms by £596m. 

Transitional relief limits the speed at which a firm’s business rates’ liability changes when the property is reevaluated every five years.

This means that businesses that must pay more benefit from “upwards transitional relief”, which subsides the process and means rates will rise more slowly.

However, firms whose rates bill should fall suffer from “downwards phasing”, which prevents them from moving to their lower rate immediately, effectively forcing them to overpay in order to subsidise upwards transition. 

The British Retail Council has called on the government to abolish “downwards phasing”, which would require central government funding for upwards transition. 

BRC chief executive Helen Dickinson said: “Every year retail faces higher and higher business rates bills, holding back much needed investment in an industry that is transforming at a dramatic pace. 

“Swift action at the upcoming Budget would show the Chancellor was serious about levelling up all parts of the UK and supporting a retail industry towards realising a brighter future.”

Eric Mazillier, UK chief executive of Decathlon, added: “The business rates system is broken and in urgent need of fundamental reform.

“It undermines investment in shops, damaging job creation and hurting high streets and town centres. Fixing the complex transitional relief scheme would be a good start.”

A Treasury spokesperson said: “We are committed to levelling up the country and want to see thriving high streets in every region.

“That’s why we’ve committed to a fundamental review of business rates and are halving rates for small shops at the Budget.

“Since 2016 we’ve cut business rates across the board, with reforms that will reduce their cost by £13bn over the next five years.”