The British Retail Consortium has warned transitional relief could cost retail £1bn over the next three years, as Frasers boss Michael Murray called for drastic government action.

The BRC said failure by the government to fix the current transitional relief for business rates will cost retailers £1bn between 2023 and 2026, with the sector subsidising other industries and forcing businesses in “poorer parts of the country, where rents are dropping, to subsidise those in richer areas, where rents are rising”.

The retail trade association has called for an end to the ‘downwards phasing’ part of transitional relief on the final day of the government’s consultation on the scheme ahead of setting business rates revaluation for 2023. 

While the BRC said it would be up to the next prime minister and chancellor to decide, it warned that retailers are already struggling with surging costs and have little room to manoeuvre before they will be forced to pass on costs to consumers. 

BRC director of business and regulation Tom Ironside said: “The business rates system is damaging our high streets and town centres by directly undermining store viability. The retail industry accounts for 5% of the economy yet is saddled with 25% of the total business rates bill.

“This is directly contributing to the loss of shops and jobs, particularly in many of the parts of the UK in need of ‘levelling up’ and putting additional pressure on prices.

“Transitional relief is a flawed system that could cost retailers over £1bn during the next three years, leaving them with no choice but to close those shops which are most impacted by artificially inflated rates bills.

“This is money that would be used to help address the cost of living or support the vitality of towns and cities around the UK. In the short run, the most impactful change that any new prime minister could make to reform business rates would be to scrap the ‘downwards phasing’ part of transitional relief.”

Frasers Group boss Michael Murray also called for drastic action from the government on business rates, arguing that the high street desperately needs investment if it is to survive. 

“There is only so much we can talk about and publicly acknowledge that rates need addressing but nothing yet has happened. We hope that, in April, it gets reviewed to a new sensible rate. We understand we need to pay some rates, but it needs to be reflective of the market conditions,” said Murray. 

“It can’t be death by a thousand cuts. They are five years behind now, they need to make one big jump. Cutting it slightly each year isn’t going to make a difference to the industry. They need to cut it hard and deep and quickly to a fair amount that retailers can afford so that more retailers can get back to investing in the high street.”

Topics