Up to 400 large shops are at risk of closure with as many as 100,000 jobs at risk if the government goes ahead with plans to hit stores with higher business rates, retailers have warned.
Some of the UK’s largest retail premises, including supermarkets and department stores, would face higher property tax charges under new rules being considered by the government before November’s budget.
The higher charges for larger sites, including warehouses, offices and other premises, are intended to pay for discounts for smaller business properties, such as independent retailers, cafes and pubs, after the Labour government pledged to make the business rates system fairer.
The bosses of big retailers including John Lewis, Lidl and B&Q met the chancellor, Rachel Reeves, last week to ask her to exclude retail from the surcharge.
The new rules are targeted at all business premises with a rateable value – a figure linked to rents – of more than £500,000. The surcharge could apply to 4,000 large retail outlets, according to the British Retail Consortium, which represents most large retail groups.
The BRC looked at how a similar level of increased costs had affected retail businesses in the past to estimate how many of sites might be forced to close under the planned tax change. It concluded that 400 big stores could close. It said retailers might also raise prices or cut jobs in order to protect their profits.
Some of the potentially affected retail outlets are so-called anchor tenants, big retailers that play a key role in attracting visitors to high streets and shopping centres, and driving trade to nearby cafes, pubs and other retailers.
Helen Dickinson, the chief executive of the BRC, said: “Britain’s largest shops are magnets, pulling people into high streets, shopping centres and retail parks, supporting thousands of surrounding cafes, restaurants and smaller and independent shops. After years of rising costs, far too many stores have disappeared – leaving behind empty shells that once thrived at the heart of our communities.”
Reeves wrote to ministers this week, saying: “We want to see thriving high streets and small businesses investing in their future, not held back by outdated rules or strangled by red tape.
“Our economy isn’t broken, but it does feel stuck. That’s why growth is our number one mission.”
The chancellor indicated that the government was considering changes to business rates to tackle so called “cliff edges”, which can lead to a leap in taxes when a small business wants to expand.
Her comments accompanied an interim report on government plans for business rate changes, published on Thursday, which included changing the way rates were calculated and improving support for investment in premises.
Kate Nicholls, the chair of the UKHospitality, which represents thousands of restaurants, pubs and cafes, said: “For too long, the broken business rates system has unfairly punished hospitality businesses and I’m pleased that the government is taking action to reform it.
“These measures to remove punitive cliff-edges and barriers to investment are positive and will help to rebalance the system, as will the government’s commitment to lower business rates bills for hospitality businesses.”
