Chancellor George Osborne has dealt a blow to retailers, ignoring their pleas to freeze business rates and save them from a £175m bill next year.
Osborne failed to address the issue as he unveiled the Autumn Statement in Parliament today.
Retail Week and the British Retail Consortium (BRC) have been working to lobby Government to halt a 2.6% increase scheduled for April next year through the Fair Rates for Retail Campaign.
Some 1,480 people have signed a petition calling for a rates freeze as well as a fairer way of calculating the rates against Consumer Price Index rather than the current Retail Price Index.
The Chancellor said small businesses business rate relief would be extended for another year to April 2014.
The BRC said the omission of business rates is “disappointing”.
Director general Stephen Robertson said: “The Chancellor should have removed the threat of a further increase next April to avoid more empty shops.
“It’s welcome news that small retailers will benefit from relief for an extra year but retail chief executives tell us a third successive substantial rates hike will deliver a further blow to investment and job creation. It is not too late for the Chancellor to offer a freeze to prevent that.”
Retailers have had to pay an additional £500m in business rates as a result of two consecutive years of onerous rates rises.
KPMG head of retail David McCorquodale said the failure to freeze rates is a “bitter blow” to the sector.
He added: “This unwelcome rise comes at a time when the sector is battling significant challenges, from reduced consumer spending to the urgent need to invest significantly in their multi-channel operations. With growth in the economy forecast at only 1.2% next year, retailers will have to work even harder in their attempts to swallow this bitter pill.
“Retailers are in for another tough year and will have to think of new ways to drive sales while swallowing a hefty rates rise to boot.”
The Association of Convenience Shops (ACS) said local shops have “lamented” the Chancellor’s failure to stop the rates hike.
ACS chief executive James Lowman said: “We welcome the Chancellor’s announcement of a one year extension to the small business rate relief scheme, but will not benefit enough businesses to stimulate the investment needed to revive high streets.”
The BRC successfully lobbied Osborne on petrol duty, as he revealed that the planned 3p petrol duty for January will be scrapped entirely, which has meant there have been no increases in petrol duty for two-and-a-half years.
Robertson said: “It will provide much needed support for consumers. It will ease the pressure on household budgets, boost customers’ ability to spend and help hard-pressed retailers contain their transport costs.”
Corporation tax will also be cut by 1% to 21% to attract further overseas investment. The Chancellor said the rate will mean the UK’s is the lowest if any major western economy.
“It is a direct message that Britain is open for business,” he added.
The British Property Federation welcomed the Chancellor’s statement that from October 2013 all newly-built commercial property completed between 1 October 2013 and 30 September 2016 will be free from empty property rates for the first 18 months.
BPF chief executive Liz Peace said: “This is a welcome first step towards mitigating the damage being wrought by empty property rates.”