The British Retail Consortium (BRC) has warned that up to 400 of Britain’s largest shops – including supermarkets and department stores – are at risk of closure if the government presses ahead with plans to impose a new higher business rates tax band on large-format retail premises.
The plan would introduce higher charges for sites with a rateable value over £500,000, such as big-box stores, warehouses and office blocks, in order to fund new permanent discounts for smaller businesses, including independent retailers, pubs and cafés.
There are approximately 4,000 large-format retail stores with a rateable value of over £500,000. The trade body noted that, like all of retail, these stores are already under pressure by soaring employment costs, high taxes, and rising rates bills, leading to the closure of 1,000 such stores over the last five years.
The BRC said the move risks destabilising high streets and retail parks by hitting anchor tenants that bring footfall to surrounding businesses. According to its analysis, the closure of 400 large shops could result in 100,000 job losses and cut local councils’ business rates income by more than £100 million annually.
“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,” Helen Dickinson, BRC Chief Executive, said.
“After years of rising costs, far too many stores have disappeared – leaving behind empty shells that once thrived at the heart of our communities. Four hundred more large stores could disappear if the government forces them into its new higher tax band. This would mean up to 100,000 jobs lost, emptier high streets, and less revenue for the exchequer.”
While the government argues that the new system will make business rates fairer for smaller firms, the BRC is calling on the chancellor to exclude large retailers from the surtax. It suggests instead that the burden could be shifted to other large properties such as office blocks, where rates form a smaller proportion of operating costs.