Retailers warn Burnham against business rates hike

Some of the UK’s biggest retailers, including Marks & Spencer, Tesco and Asda, have warned Prime Minister Andy Burnham that a potential increase in business rates for larger stores could put pressure on prices and threaten investment in high streets.

The Retail Jobs Alliance (RJA), a coalition of major food and general merchandise retailers, has sent a letter to Burnham ahead of next month’s Budget to raise concerns over potential changes to business rates, according to Sky News.

The group has warned against increasing the business rates multiplier for stores with a rateable value above £500,000, arguing that this could undermine retailers’ ability to maintain lower prices for consumers.

The RJA includes M&S, Tesco, Sainsbury’s, Primark, Morrisons and B&Q-owner Kingfisher, with the coalition representing retailers employing almost one million people across the UK.

The warning comes after Burnham pledged to reduce business rates for pubs, clubs and live music venues as part of his plans to support the UK’s high streets.

Retailers are concerned that the cost of these reductions could be offset by increasing the tax burden on larger stores.

In its letter, the RJA said it supported the government’s commitment to “growth in every postcode” and welcomed measures to reduce business rates for hospitality businesses.

However, it argued that further changes should also support continued investment by bricks-and-mortar retailers.

“Retail stores are integral to high street renaissance but they cannot continue investing in communities if they face an ever-increasing tax burden,” the group said.

The RJA also warned that higher costs could limit retailers’ ability to maintain competitive pricing and support customers through cost-of-living initiatives.

It argued that retail, hospitality and other high street businesses form a “single ecosystem”, with shops, pubs and restaurants all relying on strong footfall and consumer spending.

The retail sector meanwhile pays 21% of all business rates despite accounting for around 5% of UK GDP, while £7bn was added to the sector’s cost burden at last year’s Budget, it added.

The RJA has called for all bricks-and-mortar retailers to be exempt from the highest business rates multiplier, which currently stands at 50.8p.

The warning comes as industry groups continue to call for wider reform of the business rates system. The Real Rates Reform Alliance has separately proposed higher taxes on online sales to fund a 37% reduction in business rates for bricks-and-mortar retailers.

It also follows recent criticism from Frasers Group founder Mike Ashley, who warned last week that increasing business rates for larger retailers to fund cuts for pubs and clubs would be "delusional".