While yesterday’s much anticipated Budget delivered help for the high street it was viewed as short term only, with the business rates system remaining unchanged.
All high street retailers and business properties with a £51,000 rateable value or less will, from April 2019, see their business rates cut by a third until the next revaluation in April 2021. This means an annual saving of “up to £8,000 for up to 90% of all independent shops, pubs, restaurants and cafes.” However, there was no rates relief for retailers with larger property portfolios.
Additional highlights for the retail sector were a £675 million Future High Streets Fund to help local authorities shape the high streets of the future; and a 2% digital services tax from April 2020 on, for example, online market place providers which are both profitable and have global revenue in excess of £500 million.
So how do gift independents feel about the Chancellor’s Budget announcement? “I was delighted to hear our business rates will be going down and that Mr Hammond reiterated that the UK digital services tax will soon be levied on the internet behemoths,” enthused Bob England, owner of England At Home in Brighton. “It feels like a small step is being taken towards levelling the playing field for retailers. Hopefully, this will also ultimately bring in more tax overall so that the government can spend more on our essential social services which we all know are desperately in need of help.”
But a word of caution from Florian Kleinlercher, who co-owns 16 Between The Lines gift shops in the South of England with his wife Lindsey: “The rate reduction is very welcome and will affect many of our stores. However, I do hope the gesture isn’t just a temporary sticking plaster as this tax is in urgent need of a fundamental overhaul to make it fairer.”
Helen Dickinson OBE, Chief Executive of the British Retail Consortium (BRC) said that the Government has missed a much-needed opportunity to help the retail industry. “While we welcome measures to assist smaller retailers, the majority of the UK’s 3.1 million retail workers are employed in businesses that will not benefit from today’s business rates announcement. If the Government is to truly back business, it must engage in more extensive business rates reform to help all retailers and their employees through this period of transformation. While we welcome the temporary support being given to small businesses, these measures alone are not sufficient to enable a successful reinvention of our high streets. Retailers are currently in the midst of a perfect storm of factors – technology changing how people shop, rising public policy costs and softening demand,” she continued. Rather than tinkering around the edges, struggling high streets require wholesale reform of business rates in order to thrive. The issue remains that the business rates burden is simply too high.”
However, she added that retailers would welcome the measures announced by the Treasury to invest new funding to boost high streets and town centres and to facilitate re-invention to modern and diverse destinations. “We await with interest further details of the plans, particularly around how the funding will be targeted, who will eligible and how quickly funds will be made available.”
Top: Chancellor Philip Hammond delivered his Budget confirming that business rates will be cut by a third for many small retailers.
