Growth stunted as retail business costs rocket £20bn in seven years

Independent research by Oxford Economics for the British Retail Consortium (BRC) shows retailers’ operating costs have surged 21% over the past seven years to £116bn, but over the same period retailers’ sales values rose just 12%.

The findings will be outlined to the Chancellor ahead of the Budget which is scheduled for March 20.

While some commercial costs, such as rents, have changed in line with market conditions, while others - including business rates - have risen sharply.

The BRC said cost increases on such a scale are forcing store closures and stunting job creation.

In its submission to the Chancellor, the BRC is again urging the Government to freeze business rates in April and move the calculation to a fairer 12-month average based on the consumer price index rather than the retail price index.

Retail Week and the BRC have been lobbying the Government on these two issues since last year in the Fair Rates for Retail Campaign, as retailers face a 2.6% increase in business rates on top of two years of onerous increases.

BRC director general Helen Dickinson said: “Retail is a major force for good. It’s the UK’s largest private sector jobs provider and has been a powerhouse for investment and growth, even during the relentlessly tough times of the last few years.

“There were welcome measures in the Autumn Statement and the Chancellor has it within his gift to do a great deal more. Our figures show dramatic increases in operating costs, often as a direct result of Government decisions.”

In the Autumn Statement the Chancellor scrapped a scheduled petrol duty rise and extended the small business rate relief for another year.

Dickinson added that the Government must take note of the high-profile administrations of Jessops, HMV, Blockbuster and Republic that have happened so far this year.

She said: “Consumer spending accounts for two thirds of all expenditure in the UK. It must recover before the economy can, yet 2013 has begun with high-profile evidence that demand is weak and a painful restructuring of the UK retail industry is underway as customers change the ways in which they want to shop.”

The BRC is also calling for the Government to:

• Help improve consumer confidence by speeding up the progress towards an annual £10,000 personal allowance.
• Apply a ‘one in, two out’ to regulation to help control costs.
• Apply a ‘growth test’ to assess whether it will help or inhibit growth in the sector.
• Introduce a time-limited National Insurance holiday for all companies which employ out-of-work young people.
• Provide centralised co-ordination on implementation of the Portas Review recommendations to help revive high streets, as well as introducing a parking performance league table immediately.