BRC calls on government to slash rates by 50% to avoid April ‘cliff edge’

As part of its submission to the Treasury ahead of the end of the call for evidence for the second tranche of the business rates review today, the BRC argued a 50% reduction from when the current holiday ends next April would avoid a rash of store closures and job losses. 

In the submission, seen by Retail Week, the BRC said: “There was an oversupply of retail space in the UK before Covid-19, and trends since February have only increased this as shoppers increasingly shop online – 30% of non-food retail sales were made online in February. This had risen to 40% by September. 

“The share of grocery sales made online rose from 7% to 15% over the same period. This will not return to pre-pandemic levels even once a vaccine is available. The economics of store-based retailing have shifted.”

As the chancellor has pushed the traditional autumn Budget announcement due to the ongoing pandemic, the BRC said “an announcement on relief in 2021/22 needs to be made urgently” now to prevent retailers from needlessly earmarking stores for closure ahead of the April deadline. 

“Retailers are making decisions now on store closures and redundancies without any certainty of business rates levels in 2021/22,” it said.

“Businesses will terminate leases and reduce headcount on the basis of a worst-case scenario, creating unnecessary unemployment and economic harm – but some of this harm can be avoided if retailers have certainty soon about their 2021/22 business rate liability.”

On March 17, the chancellor Rishi Sunak granted a 12-month business rates holiday for all retail and hospitality businesses affected by the coronavirus pandemic. That holiday is currently set to end on March 31, 2021. 

The government subsequently announced a call for evidence as part of a consultation on business rates in July.  It has said the review will conclude in the spring of 2021. 

Longer term, the BRC has called on the chancellor to ensure that valuations are “more closely linked to market values” and made every three years “and more frequently if/when systems and technology allow”, compared with every five years currently. 

The BRC said it would “engage with alternative methods of taxation”, such as an online sales tax to make up any shortfall in government revenue, but insisted “retail is an overtaxed industry and there should be no net additional tax burdens placed on it”.

Earlier today, the chief executives of the UK’s largest supermarket and convenience store chains, including Tesco, Morrisons and the Co-op, wrote a letter to Sunak calling for a permanent 20% reduction in business rates, which would create 10,000 jobs in the retail industry and its supply chain.

The grocers argued these new jobs would help the government with its “levelling up” agenda in 50 of the constituencies most in need.

Revo, the membership body for landlords and retailers, has meanwhile called for the government to “introduce relief at 50% for 2021/22 to enable retailers to plan for the recovery and protect jobs” and “drastically cut the business rates multiplier from 51% to 30%, saving retailers more than £3bn”.