High street retailers with a rateable value of less than £51,000 – an estimated rental cost of the building – will get a Budget treat of lower business rates for at least the next year.
In a pre-Budget statement, the Government said that Chancellor Philip Hammond will announce later that small retailers could see their business rates bill cut by up to a third as part of a £1.5 billion plan to support the UK’s battling high streets.
This year has been particularly painful for high street shops and business rates have been blamed by many businesses and industry bodies for exacerbating the challenges faced by bricks-and-mortar retailers.
The new business rates relief will be “short-term” and is thought will apply for 2019 and 2020.
In one example given in the government statement, a pub in Sheffield with a rateable value of £37,750 will save £6,178 on business rates next year.
In another, a newsagent in Moseley, Birmingham with a rateable value of £14,250 will save £1,749.
The Chancellor is also set to announce a £650 million investment into infrastructure and transport access over the next four years to redevelop under-used retail space into homes and offices, restore high street properties and put historic buildings back into use.
In addition, it is also expected that the Chancellor will shake-up town planning rules to support mixed-use businesses on the high street and appoint a new £2m high street taskforce to offer support and advice to inject new life and purpose into British town centres.
Business groups welcomed the Government’s emergency support package for small retailers, but suggested that more fundamental reform of business rates would be necessary to really make a difference.
The British Chambers of Commerce (BCC) welcomed the Chancellor’s decision with “an alarming number of high street firms” closing or being earmarked for closure since the start of the year.
Hannah Essex, the BCC’s co-executive director of policy and campaigns, said: “This deterioration has cost thousands of jobs since the start of 2018.
“While there are long-term structural changes taking place, including changes to consumer habits, the tipping point for many of these firms has been the unnecessarily large burden that business rates place on them. Therefore, this short-term reduction in rates will be very welcome news to those on the high street who require urgent respite.
“Business rates are a heavy burden that throttle all firms with steep bills regardless of how well they’re doing or the economy is faring.
“We have also called on the chancellor to ensure that all businesses have a 12-month delay on increased business rate bills when improving an existing property or moving to a new premises. In the long term we will continue to call for fundamental reform of the broken business rates system.”
Meanwhile, the British Retail Consortium (BRC) said the temporary support to small businesses was “hugely welcome” but said these measures alone “are not sufficient to enable a successful reinvention of our high streets.”
It added: “Retailers are currently in the midst of a perfect storm of technology changing how people shop, rising public policy costs and softening demand. Struggling high streets require a broader outlook in order to thrive, particularly given the majority of the UK’s 3.1 million retail workers are employed in businesses that will not benefit from this announcement.
“The underlying issue remains that the business rates burden is simply too high and this unsustainable system needs less tinkering and more wholesale reform within the context of the wider taxation system.”
Meanwhile, Andy Mulcahy, director of strategy and insight at Interactive Media in Retail Group (IMRG) which represents the e-commerce industry, said that the government measures are “essentially palliative”.
“Retail has undergone fundamental change over the past decade or so, with digital now playing an important role in many purchase decisions. Yet online is still portrayed as a negative in much coverage of the high street story – online is seen as being an inconvenience that is ‘killing’ high streets, with politicians from across the spectrum finding it politically-expedient to call repeatedly for ‘online taxes’.
“Again though, using taxation in this way can only be a palliative measure that is unlikely to bring people back to the high street in large numbers and restore the fortunes of physical retail.
“Physical locations are, and always will be, a necessary part of overall retail. If physical retail is to thrive in the modern era the discussion has to shift away from this culture of blame, where taxation is often assumed to be the answer, over toward a debate around how online and offline can complement, enable and support each other.
“The infrastructure – and culture – will need to evolve if this model is to be achieved and, while some review of taxation may be necessary as part of that, it should not be considered the primary solution.”