Retailers in the UK are facing disappointment as the government’s plans for a major reform of the business rates system have been delayed. Despite calls from 40 trade associations, including the Confederation of British Industry (CBI), for the overhaul to be included in the upcoming Budget on 27 October, it seems that only minor changes will be announced. Chancellor Rishi Sunak has expressed his commitment to reforming the system but has been hindered by the pandemic’s impact on his ability to fully consider the implications of a significant shake-up.

Critics argue that the current business rates system, which is based on the value of a company’s physical premises, disproportionately affects store-based retailers compared to e-commerce businesses. Retailers have been vocal about the burden of high business rates bills, which are often based on old valuations when property values were higher.

The delay in reforming the system is causing concern among industry insiders. The CBI’s chief economist, Rain Newton-Smith, highlights the impact on investments, stating that business rates have become a tax on investment. The delay could hinder the government’s net-zero ambitions, as up to half of business investment may be subject to these rates. The British Retail Consortium (BRC) warns that without reform, many bricks-and-mortar stores could face closure.

Head of Business Rates at property company Colliers, John Webber, expressed disappointment with the delay, citing its detrimental impact on businesses and job losses. He called for a reduction in the business rates multiplier to provide relief, particularly for the struggling retail and hospitality sectors.

Retailers now await further details in the upcoming Budget to see what changes will be made to the business rates system. The delay in wholesale reform is a setback for the industry, which is already grappling with pandemic-related challenges and changing consumer behaviors. The high street, in particular, could face significant consequences if timely and substantial reform is not implemented.

Useful links:
1. Retail Gazette – Organisations Demand Major Overhaul of UK Business Rates in Budget
2. BBC News – Business rates reform: Retailers call for changes to boost high street