Sainsbury’s and USDAW have together called on the new government to deliver on its promise to reform business rates.The call follows research which “demonstrates that failure to act could lead to 17,300 retail closures over the next ten years”.
The research, carried out by Development Economics, warned that an increase in rates will cost businesses £1.6bn in the first year, with 4,300 retail jobs set to be lost in 2024/25.
Sainsbury’s warned that if the government continues on its current trajectory of annual inflationary increases to the tax, otherwise profitable retail stores will become unviable and result in an estimated 17,300 closures by 2033/34.
According to the report, a 20% headline cut to retail business rates would actually generate more net revenue for the taxpayer because “more stores would thrive and businesses would invest more as a result”. Development Economics estimates that with such a reform, within ten years additional business rates revenues of £70m per year would be generated for the Exchequer.
A 20% cut would also protect and create over 17,000 retail jobs which might otherwise be under threat. It would also boost GVA, a key measure of a sector’s contribution to the economy, by £400m per year.
Simon Roberts, CEO of Sainsburys, said: “All responsible retailers want to pay their fair share of tax, but the current business rates system has become an enormous burden on our industry. It is no longer fit for purpose. It has failed to keep pace with major changes in how customers are now shopping and how much our retail industry has changed over the last decade. As a result, it is directly causing store closures and job losses across the sector.
“We believe there is a better way – one that will contribute to higher economic growth and help our communities to thrive. Today’s report shows that reducing business rates would enable businesses to invest in more stores, creating jobs and generating prosperity. We welcome the new Government’s manifesto commitment to reform business rates and hope that it will move quickly to deliver on this promise, which would deliver real benefits for communities, employees and businesses alike.”
Paddy Lillis, General Secretary of USDAW, added: “The scale of the challenge the retail industry faces is huge, with very high numbers of job losses and store closures that are scarring our high streets and communities.
“A robust plan is needed for the future of retail work that addresses both the immediate and urgent priorities facing the industry and staff, as well as wider measures to help deliver better jobs. We need a co-ordinated and inclusive approach, involving all key stakeholders.”
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