In yesterday's Autumn Statement, Chancellor Jeremy Hunt outlined a range of economic proposals including cuts to National Insurance, cementing of the 'full expensing' capital allowance for the purchase of new machinery and equipment, and the raising of the National Living Wage, among other changes.
In terms of business rates, an area that keenly affects retail and hospitality businesses in particular, he confirmed the extension of the current 75% business rates relief for medium-sized and larger retail, hospitality and leisure properties for one year, and a temporary freeze on the Small Business Multiplier.
However, the statement did not go nearly far enough to address the problems facing retail, says Helen Dickinson, chief executive of the British Retail Consortium (BRC): “Retailers and their customers have been sold out by the Chancellor’s statement, which does not do enough to support shops, shoppers, and an industry that employs over three million people, and many more across its supply chains.
"As we enter the Christmas period, this Autumn Statement will serve only to renew inflationary pressures that ultimately harm households.
“The Chancellor has poured fuel on the fire spreading across our high streets with a tax hike on shops and other businesses. His decision to increase the business rates standard multiplier will cost retailers hundreds of millions every year. Rather than introduce the meaningful reforms that were promised in the Government’s 2019 manifesto, the Chancellor is now letting the tax spiral out of control, driving up costs just as retailers’ efforts to curb inflation have started to bear fruit.
"This tax hike comes at a time when retail sales volumes have hit their lowest level in two years. Yet business rates must be paid in full before a business sells a single product or service. This flawed tax continues to wreak havoc on our town and city centres, closing shops and costing jobs. And with the Chancellor introducing the largest increase to National Living Wage on record, retailers are under ever-increasing cost pressures, even as the Government withdraws its support.
“The extension to the Retail, Hospitality and Leisure relief and the freezing of the Small Business Multiplier is a gesture of support to high streets and while it may help some smaller businesses, it does nothing for those retailers that provide the lion’s share of employment, investment, and low-cost essentials for customers. The Chancellor has done little to prevent the decline of our town and city centres and his decision will see thousands of stores pushed into the red, jeopardising their commercial viability. This will lead to inevitable consequences for shops and jobs on high streets, right across the country.
“The country needs wholesale reform of our broken business rates system. Retailers pay over £7b a year in business rates – over 22% of the total raised by the tax. This must not continue – it is imperative that we see parties commit to reforming the broken business rates system in their manifestos for the next General Election, and to lowering the disproportionate burden that this tax has on the retail industry.”
