This year has been one of the most turbulent in living memory as the Government has faced a series of unprecedented challenges.
Now a new Tory cabinet is tasked with rejuvenating global confidence in the UK to secure a new and improved trading environment.
Against this, UK retailers – particularly in London – must also contend with the certainty of an unacceptable and unfair imposition of business rates increases, posing a threat to both jobs and investment.
“The Government is seeking to impose a 20th century tax on a 21st century method of operation”
Some of the West End’s landmark shops will be facing an average increase of 80% a year, which is to be implemented so quickly that adjustment to this extra cost will be extremely tricky.
Turnover in the West End has risen by about 30% since the last revaluation in 2008 – somewhat incongruous with the 80% increase that retailers are now expected to pay.
On a district level, this means the West End would have to generate £2.5bn of additional sales a year to cover these newly imposed costs.
It could be argued that the West End is experiencing a surge in sales as a result of the weakening pound and can therefore afford the rises.
But the truth is this is only a marginal, short-term, single-digit uplift. It will by no means compensate for the huge costs that will come next April with business rates.
“We urge the Government to introduce a more realistic scheme of transitional relief, with a lower percentage increase and a longer transitional period”
Essentially, it seems that the Government is seeking to impose a 20th century tax on a 21st century method of operation.
The system is inequitable and benefits neither retailers, nor indeed the Government.
We need a system that is more immediate, more sensitive to the economic cycle and does not set London’s retailers against the rest of the United Kingdom.
We urge the Government to introduce a more realistic scheme of transitional relief, with a lower percentage increase and a longer transitional period.
In short, we want the same transitional relief scheme that has been applied in every previous revaluation.
Generating new spend
Secondly, we want the Government to review – on a district-by-district basis – measures that can help retailers generate additional spend to pay for these additional costs.
A West End-specific measure would be to allow extended Sunday trading in the officially designated International Shopping Centres in the Mayor’s London Plan, which would generate an estimated annual net sales increase of £260m.
“The real action that we require from the Government is the recognition that this antiquated and unfair system is no longer fit for purpose”
Another essential would be to secure support for the West End Partnership’s request to keep some of its business rates to part-fund public realm and infrastructure improvements necessary for the opening of Crossrail’s Elizabeth Line.
But the real action that we require from the Government is the recognition that this antiquated and unfair system is no longer fit for purpose.
It must consider an urgent review, for something that works in a climate where online retailers have secured a significant proportion of high-street sales but do not experience the same level of business rates as traditional retailers, given their method of operation.
I hope 2017 is the very last time we see this antiquated system used against businesses and the national interest.
- Sir Peter Rogers is chairman of New West End Company