Inquiry into the retail sector to look at business rates impact

The Department for Business, Innovation and Skills (BIS) Select Committee, which is leading the inquiry that opened two weeks ago, is set to examine the impact of the business rates system on retailers.

BIS Select Committee chairman Adrian Bailey, MP for West Bromwich West, said: “There have been a number of reports from retailers, saying business rates are a major element [of their problems].”

He said an overburdensome level of business rates could incentivise bricks and mortar retailers to close stores and move online because etailers only pay the property tax on their distribution centres.

“If there is not a level playing field it will accelerate the problems retailers face on the high street,” Bailey added.

Retail Week and the British Retail Consortium are campaigning to get a fairer business rates system through the Fair Rates for Retail campaign, which is lobbying Government to calculate rates using the annualised CPI inflation rate rather than September’s RPI. It also campaigned Whitehall to freeze business rates this year, but this plea was ignored by the Chancellor in his Budget last week.

From Monday business rates will go up, leaving retalers paying an estimated £175m extra for the year. It follows a £500m increase in rates over the past two years.

The Inquiry, which was launched as a result of the plight of the high street and the administrations of Jessops, HMV and Blockbuster this year, will also look at how UK retailers can grow overseas and export skills.

“We want to look at how we can establish Britain as the world leader within the retail sector,” Bailey said.

Bailey said the Inquiry will be different from the Government’s Portas Review, which was developed to help ailing high streets. But Bailey added he supported the Review. “The Review made recommendations but I don’t think there has been a sufficient voice for them,” he said.

Bailey said the result of the Inquiry could be published as early as June before Parliament breaks up for summer recess.

Despite support form top retailers, the Chancellor George Osborne failed to mention business rates in his Budget speech last week.

Bailey said: “They know that changing any tax system is difficult and until now it has been put into the ‘too difficult to do’ pot but because of the problems we’ve mentioned should now be in the ‘cannot ignore’ pot.”