Save Britain’s high streets: As it’s revealed 50,000 retail jobs were axed in the past six months the Mail calls for urgent overhaul of crippling business rates
- Business leaders and shop owners blame punitive business rates and high rents
- Last year UK high street shops closed at a staggering rate of 16 every day
- In recent months Poundworld, Toys R Us, Maplin and Prezzo have all suffered
The Mail today launches a campaign to save Britain’s high streets – after a staggering 50,000 retail jobs were axed in the first half of this year.
The figures expose the bloodbath up and down the country as hundreds of stores – from major chains to small shops – shut their doors.
Business leaders, shopkeepers and MPs blame punitive business rates that cripple high streets and hand a huge advantage to internet giants.
Today chief executives of some of the country’s biggest chains, along with politicians from all parties, demand reform as they warn that sky-high rates are stifling investment and driving long-established companies to the wall.
The Mail is launching a campaign to save Britain’s high street after 50,000 retail jobs were axed
Last year shops closed at a rate of 16 every day. Figures compiled by the Press Association show that between January and June this year, 50,000 jobs were either lost or expected to go.
In recent months the trail of destruction has hit household names including House of Fraser – which has put 6,000 jobs under threat – and Poundworld, which plunged into administration endangering a further 5,100.
Toys R Us and Maplin collapsed, while chains such as Prezzo, Byron and Jamie’s Italian shut restaurants and culled hundreds of jobs.
Meanwhile, the taxman is raking in more and more from business rates – with a total haul of £30.8 billion predicted this year, up from £29.6 billion last year.
The vast majority comes from major retailers in the heart of towns and cities, while online stores and out-of-town shopping centres pay much less in both rates and corporation tax.
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Critics say high business rates which force firms to go bust are self-defeating, as they reduce tax revenues.
Marks & Spencer, which is closing more than 100 stores in the next four years with hundreds of jobs at risk, told the Mail that rising rates were partly to blame for its drastic plans.
Chief executive Steve Rowe said: ‘Business rates are an unfair burden of taxation directly contributing to the challenges the high street is facing. The long-term effects of these charges are now a reality.
‘Our Covent Garden store faced a rate rise of close to a half a million pounds in the year before it closed, an untenable position for any retailer.
Today chief executives of some of the country’s biggest chains, along with politicians from all parties, demand reform as they warn that sky-high rates are stifling investment and driving long-established companies to the wall
‘These challenges will continue until the system is reformed to create a level playing field between high street and online retailers.’
Tesco chief executive Dave Lewis said: ‘UK retail is the most employment-dense sector of the economy, so constantly losing businesses in the way we are will have an economic impact.
‘And so if they’re not careful the Government risk taking too much out of business rates and then losing in the medium term.’
Labour MP Frank Field, chairman of the Commons work and pensions committee, said: ‘The taxation of online retailers and firms which funnel their profits abroad should be changed now.
‘A specific sales tax should be put on those firms that compete against the high street and barely pay a penny to the Government. Reform is long overdue.’
Senior Tory backbencher Jacob Rees-Mogg said: ‘Business rates have not kept up with economic change.
High street shops are penalised while online sellers face lower charges giving them another competitive advantage.’
Lib Dem leader Sir Vince Cable said: ‘This is a very important and welcome campaign.
Last year shops closed at a rate of 16 every day. Figures compiled by the Press Association show that between January and June this year, 50,000 jobs were either lost or expected to go
‘There must be a level playing field and this campaign would be a significant step to achieving that.’
Business rates are based on the estimated rental value of a property. It means that traditional retailers such as department stores with large premises in town and city centres are hit particularly hard, while newer internet rivals such as Amazon pay far less.
Mike Cherry, chairman of the Federation of Small Businesses, said one in five of his organisation’s members had thought about closing down or selling up because of the pressure from business rates.
He said: ‘Along with spiralling rents, increasing labour costs and weakening consumer demand, rising business rates bills are threatening high streets across the country.
‘Business rates are an unfair and regressive tax, which hit firms before they’ve made their first penny in turnover, let alone profit.’
Suren Thiru, head of economics at the British Chambers of Commerce, added: ‘The broken business rates system puts pressure on firms of all shapes and sizes, taking no account of economic circumstances or business performance.
‘In this climate of sluggish growth and weak investment, a system which saps funds and undermines firms’ investment potential is particularly jarring.’
The Institute of Directors and Confederation of British Industry also backed calls for reform.
Business leaders, shopkeepers and MPs blame punitive business rates that cripple high streets and hand a huge advantage to internet giants
Meanwhile, pub and restaurant bosses say rates have made it hard to survive in an industry where profits have always been tight and rising inflation has put them under even more pressure.
Experts say 2018 will go down in history as the ‘year of the Company Voluntary Arrangement’ – an insolvency procedure used to push through several store closure programmes this year.
Robert Hayton, head of UK business rates at Altus Group, said: ‘Business rates are rarely the sole driver for insolvencies but certainly a contributory factor, with bills having risen by more than a fifth through inflation during the seven years before last year’s revaluation.
‘Add that to the lethal cocktail of other increased operating costs for the national living wage and apprenticeship levy and it creates the perfect storm.’
The Institute for Fiscal Studies think-tank says business rates should be torn up and replaced with a new system where the value of the land itself is taxed, rather than the buildings on top of it.
Independent retail analyst Nick Bubb said: ‘Government ministers will weep crocodile tears about the situation, but it is government policy that is partly to blame, given the lamentable failure of the Government to shift the unfair burden of business rates away from hard-pressed high street retailers and find a way of taxing online retailers more effectively.’
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