Are business rates killing the British high street?

Tesco chief bemoans ‘uneven playing field’
as House of Fraser and Poundworld announce heavy job losses

One-Minute Read

A total of 11,500 jobs are at risk under plans by House of Fraser to close more than half of its
shops. The group’s department stores have been struggling under
the weight of “staggering” business rates, City A.M. reports. 

Poundworld has also announced that it is set to appoint an
administrator. The latest blows to the UK high street come less
than a month after Marks and Spencer revealed plans to close 100
stores.

Labour has accused the Government of presiding over “high-street
annihilation” by failing to ensure a fair business rates system,
says the Norwich Evening News.

Business rates were increased across the UK in April,
for the second year in a row, following a government review.

Tesco chief executive Dave Lewis said today that the current
rates system puts traditional high-street retailers at a major
disadvantage.

He told the BBC: “Are we allowing it to stay competitive, or are
we by stealth lowering corporation tax and increasing business
rates to a place which is creating an uneven playing field and
forcing people to think about how it is they avoid that cost and
find other routes to the market?”

Critics of the the business rate increases say they work in
favour of online retailers such as Amazon, as their out-of-town
warehouses are worth less than high-street property.

Lewis said business rates was the biggest tax that his company
paid, adding up to more than £700m a year.

In 2017, Sainsbury’s chief executive Mike Coupe made similar
complaints, describing the rates as “archaic” and called for
“fundamental reforms”. He said that the supermarket giant was
facing annual rates of about £500m.

Labour claims that in the first three months of this
year, 21,000 jobs in the sector were at risk as a result of the
punishing increases.

However, Business Secretary Greg Clark said the loss of stores
was “by no means new in British retailing”, and that it was a
continuation of “a story of constant change in the retail
sector”.

Research from rates specialist CVS found that businesses
in England and Wales face a total £1.2bn hike over the coming
year. A large number of companies are heading to court for failing
to keep up with growing payments, the site adds.