Up to 100,000 jobs in high street retail are at risk due to potential tax changes proposed by the Labour Party, according to industry leaders. They have raised concerns that 400 major retailers, including supermarkets and department stores, could shut down if the government proceeds with its business rates reform plan. The British Retail Consortium (BRC) has identified approximately 4,000 large stores with a rateable value exceeding £500,000, which could face closure under the proposed changes. If these stores were to shut down, it is estimated that over 100,000 jobs could be lost, leading to a significant decline in business rates revenue for local councils.
During a recent meeting with retail executives, Chancellor Rachel Reeves was urged to overhaul the business rates system urgently. Jason Tarry, chairman of John Lewis, emphasized the pressing need to address the high rates bills, which represent a major expense for retailers alongside wages. The BRC’s Chief Executive, Helen Dickinson, highlighted the importance of large stores in attracting foot traffic to high streets and supporting local businesses. She warned that forcing these stores into a higher tax band could result in job losses, vacant storefronts, and reduced revenue for the government.
Retailers currently bear a disproportionate share of business rates, despite contributing only 5% to the economy. Large stores with a rateable value above £500,000 pay a significant portion of the total business rates bill for the sector. The BRC argues that any substantial increase in rates would put additional strain on retailers already operating on thin profit margins, potentially leading to price hikes, job cuts, or closures.
The BRC, which represents over 5,000 retailers, is advocating for the exclusion of large stores from the proposed rate hikes. Instead, it suggests a slight increase in rates for other large properties like office buildings, where business rates are a smaller proportion of costs and have less impact on jobs and prices. The Treasury has indicated that further details on the reforms will be disclosed in the upcoming Budget, with assurances that only a small fraction of properties will face higher rates.
In response to concerns raised by industry stakeholders, a Treasury spokesperson emphasized the government’s commitment to creating a fairer business rates system. Starting in April, lower tax rates will be introduced for retail, hospitality, and leisure properties, funded by a higher rate applied to less than 1% of the most valuable business properties. The spokesperson clarified that there will be no cash cap on the new lower rates and outlined plans to address system inefficiencies, particularly those affecting small businesses.
As discussions on business rates reform continue, Chancellor Rachel Reeves is exploring ways to eliminate barriers hindering small business growth. The Treasury is reviewing the existing system to streamline processes and promote economic expansion. Ms. Reeves stressed the importance of tax reforms in driving growth and supporting small businesses by removing obstacles to expansion.
Kate Nicholls, chairwoman of UKHospitality, welcomed the government’s efforts to reform the business rates system, which has historically disadvantaged hospitality businesses. She expressed support for the ongoing reforms aimed at creating a more equitable and conducive environment for businesses in the sector.