Top retailers have called for a freeze on business rates and changes to how the charge is calculated as they face a likely increase of £200m next year.
They have thrown their weight behind the Fair Rates for Retail campaign launched today by the British Retail Consortium and Retail Week.
After two years of punitive rates increases that added more than £500m to costs, retail leaders believe the industry should not bear a further burden. It would restrict their ability to invest, create jobs and improve town centres, as well as exacerbate harsh trading conditions.
Retailers, who pay 28% of all business rates, have also urged a change in how rates are decided. At present the September Retail Prices Index (RPI) is a key determinant, but a switch to a 12-month average of the less volatile Consumer Prices Index (CPI), which typically moves in a narrower range, would ensure greater long-term affordability and certainty.
John Lewis Partnership chairman Charlie Mayfield said: “Disproportionate increases in business rates that bear no relation to growth risk putting retailers in an even more precarious position, particularly small and independent retailers.
“We support the call for a freeze on business rates for 2013 and urge the Government to make the business rates regime more affordable and predictable.”
The call came as it emerged that retail sales growth is averaging half the level before the collapse of Lehman Brothers heralded the credit crunch and recession.
Alliance Boots health and beauty chief executive Alex Gourlay said: “At a time when many high streets and town centres are experiencing high levels of vacancy and under-use, both the cost of operating in them and the confidence to invest in them are key factors determining their future vitality.
“The current rates system is a substantial contributor to lower investment and growth in high streets.”
Morrisons chief executive Dalton Philips maintained: “Setting business rates on a single month’s RPI is completely arbitrary, yet it impacts investment and jobs all year round.
“We’ve got to get a sensible new approach to replace this rates lottery, which is damaging confidence and hampering growth.”
Aurora chief executive Mike Shearwood said: “Business rates are based on an unrealistic view of the real estate market at a time when landlords are working with retailers to make sure rent is affordable. It’s outrageous. We have less opportunity to take people off the dole.”
Toys R Us UK managing director Roger McLaughlan said: “This has a significant impact on our cost base. The rises over the last couple of years have added to the difficulty of trading during economic uncertainty.”
Debenhams chief executive Michael Sharp said: “While we appreciate the pressures on the public purse, the Government should look again at how the 2013 increase is calculated if it really wants to see our high streets flourish.”
BRC director-general Stephen Robertson said: “The most important four-letter word in Westminster should be jobs but another £200m next year can only lead to more closed shops and fewer chances of work for those, including young people, who need it most.
“The Government must act on its promise to review the system. And it should recognise that retail has already more than made its contribution by freezing rates in 2013.”