Budget 2013: Body blow to retailers as Chancellor ignores pleas to freeze business rates

Osborne made no mention of business rates in the Budget today despite retailers, which are facing a £175m hike to business rates next month, urging them in recent months.

Retail Week, alongside industry trade body British Retail Consortium, has been lobbying for a freeze through the Fair Rates for Retail campaign, launched last year.

The campaign also seeks to alter the way business rates are calculated to a fairer 12-month average based on the consumer price index rather than the retail price index.

Fair Rates for Retail garnered over 1,500 signatories including Alliance Boots chief executive of the health & beauty Alex Gourlay, Debenhams chief executive Michael Sharp, Morrisons boss Dalton Philips, Ryman ower Theo Paphitis, Asda boss Andy Clarke, Aurora Fashions chief executive Mike Shearwood and the Government’s high street advisor Mary Portas.

Retailers face a 2.6% increase in business rates next month on top of two years of onerous increases which have cost the industry an additional £500m.

Business secretary Vince Cable warned the industry at Retail Week Live last week not to expect any relief from rates in the Budget.

Supporting a plea from the British Retail Consortium, Osborne announced in the Budget that it is scrapping the planned fuel duty increase in September. The decision has resulted in two years of frozen fuel duty, which has saved drivers 13p in duty and results in a £7 saving each time the owner of a Vauxhall Astra fills up on petrol.

British Retail Consortium director general Helen Dickinson said: “The support that was secured for customers wasn’t matched by direct help for high street businesses.

“Economic growth is the key to deficit reduction. This was the Chancellor’s opportunity to maximise retailers’ contribution to re-establishing growth by keeping more money in customers’ pockets and leaving retailers with more money they can invest. 

“He’s done well for hard-pressed households but could have done more to help retail businesses to help him deliver jobs and growth.   

“Moves on the income tax threshold and fuel duty are great for consumers’ confidence and ability to spend, which will help retailers and the wider economy. But, pressing on with a third-successive substantial business rates rise is very disappointing. Freezing rates would have made a real difference to our troubled high streets and the communities that rely on them.

“It’s now even more important that the Government delivers quickly on its existing commitment to reassess the formula for determining future years’ rates increases.”

In addition, the Chancellor revealed a second 1% cut to corporation tax, which will reduce it to 20% from April 2015. It follows the 1% cut scheduled for next year.

Household budgets have also been eased slightly as no-one will have to pay income tax on the first £10,000 of their salary, which will mean the typical basic rate taxpayer will pay £705 less income tax a year in cash terms. This has been delivered a year earlier.

Small businesses were big winners and will benefit from a new Employment Allowance. This will ensure businesses are entitled to £2,000 a year towards their National Insurance Contributions bill and will mean 450,000 small businesses will pay no jobs tax at all.

In addition the Government will consult on re-designing the Retail Export Scheme to make it easier to use and understand, reduce the scope for error, improve compliance and protect revenue.