Budget 2020: Retail and leisure sector reacts to ‘disappointing’ business rates reform
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Business rates have been the key issue for retailers in the run up to today’s budget, made even more crucial by the outbreak of coronavirus.
Chancellor Rishi Sunak announced measures to support more small leisure, hospitality and retail businesses with a rateable value of less than £51,000.
Business rates for those firms will be scrapped for a year to mitigate against the impact of the outbreak on consumer demand and supply chains.
Experts welcomed the move to help smaller firms, but slammed the omission of a package to help the biggest high street retailers.
“Suspending business rates for small high street firms is a huge bonus for our town centres and high streets,” Mike Cherry, the national chairman of the Federation of Small Businesses said.
Industry body UK Hospitality welcomed the measures outlined in todays budget, saying it will give smaller businesses “some breathing room”. However, it said larger operators have been “utterly ignored at a time of business crisis”.
No business rates relief for larger businesses
While Sunak did announce a review of business rates – to report in the autumn – today’s budget did not offer help for larger retailers.
The industry had called on Sunak to reform transitional rates relief, which can result in large retailers paying too much in business rates.
Cushman & Wakefield partner Mike Flecknoe said it was “disappointing” that there was no business rates support for large firms, “even those occupying multiple lower value properties”.
“The Chancellor did announce that the promised fundamental review on business rates will take place but will not report until the Autumn,” he said.
“It is a pity that he did not use this opportunity to scrap downwards transition to assist all those ratepayers paying artificially high rates.”
Paul Moorcroft, head of consumer at Eversheds Sutherland added that industry efforts had “fallen upon deaf ears”.
He said: “This will be a major disappointment for bigger retailers and supermarkets, who continue to make great efforts to influence policy change, but continue to get nothing in return from successive governments.”
“The temporary rates relief announced today will not help the West End’s retailers bounce back from the challenges of Covid-19,” New West End Company chief executive Jace Tyrrell added.
“These businesses are the heart of retail in the UK, and their health is directly linked to the state of our economy.”
‘Sticking plaster’ approach?
Sunak announced a review of the long-term future of business rates, which will present its findings in autumn.
The industry will now have to set its sights on that review in the hope of securing wider change.
HHilary Ross, head of retail, food and hospitality at DWF said the abolition of rates as part of emergency measures will “make it very difficult for the government to distance themselves from the business rates issue in the future”.
JLL head of rating Tim Beatty said “The government needs to ensure it doesn’t just repeat other recent consultations which have all led to small, iterative changes (the “sticking plaster” approach) rather than meaningful ones and to deliver them quickly.
“The retail sector has been at the forefront of the call for more radical change and in particular have coalesced around the idea that the government needs to remove downward transition at the next revaluation and we therefore take further encouragement from the fact that the review is to focus on this area from April 2021 and we therefore implore the chancellor to “get transition sorted”.”