The Chancellor will again delay plans to improve the business rates regime, pushing a nail in the coffin on the high street, and the Government will push back an announcement for improvement a second time.
The commercial property tax has been condemned for high street woes – retail pays a quarter of rates despite making up 5 per cent of the economy.
Helen Dickenson, of the British Retail Consortium, said that every week of delay was a nail in the coffin for high streets as four in five retailers said that they’re likely or certain to close their stores.
A consultation into the broken system ended in September last year, and the Government was supposed to announce its plan at the Spending Review, following a delay from the Spring.
Groups representing high street businesses are now worried the problem has been booted into the long grass, although last night Government sources told a newspaper outlet that ministers have delayed reform until a later date.
They said they’ve not had time to consider how the reform would affect the sector or the long term impact of the pandemic on high streets.
Kate Nicholls, chief executive of UK Hospitality, said that it’s hugely disappointing because root and branch reform has been promised in two manifestos and was certainly overdue, and that they would urge the Government to grasp the nettle to reform rates to rejuvenate the high street.
She added that without reform, rates relief given to high street firms this year must be extended until longer-term changes were implemented to circumvent a cliff edge of support.
The Government has been reluctant to make important adjustments to a tax that raises £32 billion per year, but the high street has long argued that they’re overtaxed, with retail paying a quarter of all rates despite only making up 5 per cent of the economy.
Rishi Sunak is considering a digital services tax of 2 per cent of revenues to try and level the playing field between the high street and online giants, which could be announced as early as this week, but the measure has been rejected by numerous large retailers, including Marks & Spencer, who say it’s wrong to introduce a new levy on an already overtaxed industry.
They have proposed decreasing business rates by about a third and substituting it with an increase in corporation tax – a tax on a company’s profits.
High street shops are going to be a thing of the past, although they won’t vanish altogether, but they will be transformed, and frankly, there will always be a home for intelligent local retailers because they can offer more reliable customer service, more personalisation, and better localisation, which local retailers usually master key logistics, and many customers will still need a service that online shops won’t be able to give.
This is what the high street of the future will look like.
Imagine a future where the number of shops in Britain’s town centres would have halved, but you could never imagine how swiftly that revolution would come.
The impact of the pandemic in our towns and cities has been seismic, and the negatives of this are and will be visible with store closures, job losses and empty streets. But if the Government show some imagination, they could be turning our urban centres from shopping deserts into community hubs, with shops alongside medical centres, entertainment venues, restaurants and cafes – all the places and sorts of things that people will want to do and go.