Marks & Spencer boss Steve Rowe has warned that the “unbearable yoke” of business rates will spark thousands more job losses unless the tax is overhauled by the government.
Rowe said that the “seismic upheaval” caused by the pandemic would lead to more pain on the high street unless chancellor Rishi Sunak delivers on his “fundamental review” of the system.
The M&S supremo called on Sunak to use the planned increase in corporation tax – expected to be confirmed at the Budget – to overhaul rates and deliver a lifeline to struggling high streets.
The chancellor will deliver an interim report on the Treasury’s business rates review on March 23, but a full report on the findings has been delayed until the autumn.
Rowe has joined the growing clamour among retailers for urgent action to be taken.
Speaking to the Daily Mail, Rowe said: “The ever-increasing burden of rates has become an unbearable yoke around the neck of thousands of shopkeepers and their communities.
“Our sector faces the fight of its life and the government needs to act on its forthcoming review on rates. The fairest way to tax is based on profit. By our calculations, a minimal increase in corporation tax would fund our proposed reduction for all ratepayers.”
The coronavirus pandemic and resulting nationwide lockdowns have forced an increasing number of consumers to shop online. Spend has shifted to ecommerce channels at a rapid rate, prompting an increasing number of calls for business rates to be overhauled.
Writing for Retail Week earlier this month, Dixons Carphone boss Alex Baldock called for an increase in the rates paid by warehouses to help save high street stores.
“Over the past decade, all the growth in retail has come online and, as a consequence, the only part of the commercial property market where rents are growing – and they are growing dramatically – is distribution warehouses. Yet rates bills for sheds are proportionately a fraction of those for stores,” Baldock wrote.
“We need much faster resettlement of rates to reflect changing rental values. This would be fairer, rebalancing the bill away from the struggling high street towards those better able to pay.”
Next boss Lord Simon Wolfson echoed those views in an interview with the BBC last week, proposing a 50% hike in the business rates bills of warehouses to “fairly reflect the value” of commercial properties in the digital age.
“In-store sales at Next have gone down 25% since 2015, but our rates on those properties have gone up 9%. They have become unfair because they no longer reflect the value property against which they’re charged,” Wolfson said.
“Rents on shops have been coming down, rents on warehouses have been going up and the rates don’t fairly reflect the value of warehouse property either. So I think the government can fund some of this by increasing rates on warehousing by around 50%.”