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INDUSTRY OPINION: Business rates devolution will not ease retail burden

Following the Autumn Statement announced yesterday, head of retail and wholesale for accountancy firm Wilkins Kennedy Phil Mullis argues below that this will not help to ease the burden on retailers.

The retail industry stumps up the most cash of all UK business sectors, with £7.8bn spent last year on business rates. Not surprisingly, London and surrounding areas footed most of the bill. But in an effort to review the rates system, the chancellor has announced that he will now devolve powers concerning business rates to local authorities. However, this will not solve the rates burden issue for retailers.

Business rates are one of the most significant costs that businesses have to face and, for the Treasury, it generates valuable income. This means that in order to maintain fiscal neutrality, rates will never be scrapped – only reviewed.

Not only are business rates pulling at the purse strings, the impending increase in the living wage and other red tape could mean an extra £14bn being spent by the retail industry over the next five years. This increased cost will mean increased tax take (great news for the Treasury) but also a threat to the welfare of retail businesses if rates are not given a dramatic overhaul.

Business rates are one of the most significant costs that businesses have to face

Retail is one of the biggest employers in the UK, with a 3 million-strong workforce making it a significant contributor to the UK economy. If anything, rates will create a greater push towards a move online, but this could mean less retail jobs becoming available. Inevitably, the high street will die as the consumer chooses the online shop over the bricks-and-mortar store.

More needs to be done to ensure that rates are fairer and brought up to date. It is not just the smaller retailers that are facing the burden – larger retailers are also championing change. In order to secure the future of the high street, the Government needs to be much more proactive and sensitive to the way the world is changing. This could not only lead to a high street recovery, but it will also help to stabilise the retail sector overall.

The Government needs to be much more proactive and sensitive to the way the world is changing

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