As many as 100,000 jobs could be at risk if the government goes ahead with plans to increase business rates, according to the British Retail Consortium.
If new rules on property tax charges are introduced at the next Budget, due to take place on 26 November, the BRC estimates that 400 big retail businesses could close, while others would have to trim headcount to protect profits.
These businesses have a rateable value of over £500,000, meaning they would be hit by the proposed higher business rates tax band, if it goes through.
Retailers have already been hit by the increase in employers’ national insurance announced in last year’s budget, with many cutting back on benefits for staff or cutting the size of their workforce.
The BRC argues that because of the small profit margins that exist across retail, a significant rise in rates for large stores would force these shops to raise their prices, employ fewer people, or even close their doors entirely.
It also believes that local councils’ business rates receipts from retail would fall by more than £100 million a year.
Helen Dickinson, BRC chief executive, 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.”
Dickinson is urging chancellor Rachel Reeves to exclude large shops from the proposed higher business rates tax band and secure jobs.
“But failure to act risks shuttering hundreds more stores, costing jobs, communities and the economy far more in the long run,” she added.
Yesterday (11 September), the Treasury pledged to remove “cliff edges” on business rates for smaller firms, however.
This is where employers might face a sudden jump in rates as they move from one band to another, and so are reluctant to invest in new premises.
Currently when a business opens a second property, they lose access to all Small Business Rates Relief (SBRR).
Writing to ministers this week, Reeves said the Treasury will look into ways SBRR can support growth by removing these cliff edges.
Kate Nicholls, chair of UKHospitality, welcomed the proposals. She said: “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.”
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