UK bosses call on Sunak to reform business rates, or risk high street collapse

Chief executives at 18 of the UK’s best-known companies have written to Chancellor Rishi Sunak calling on him to reform business rates or put high street retailers at risk. The signatories of the letter say that the current business rates system puts an unfair amount of the tax burden on brick-and-mortar companies compared to online retailers.

The letter states that, currently, business rates are not sustainable and will seriously hamper the long-term prospects of physical businesses to recover from COVID-19 and that, unless there is reform, “shops at the heart of communities will be at risk”.

Ahead of the spring budget next month, the letter directly addresses the Chancellor, saying: “We urge you to use the upcoming budget to commit to fundamental reform of business rates focused on reducing the burden on retailers and levelling the playing field between bricks and mortar and online businesses”.

The 18 signatories, including the chief executives of Tesco, Waterstones, Asda, Hammerson, Morrisons and B&Q, collectively represent tens of thousands of physical locations and over a million employees.

The Treasury is currently exploring the option of an online sales tax, following the meteoric increase in online shopping since the start of the COVID-19 pandemic and the devastating impact it has had on the UK high street. The government is also due to report back this spring on a review of property tax it launched last year.

Tesco, one of the signatories of the letter, said: “We believe strongly that there should be a level playing field for all retailers, online or physical, which is why we propose a 1 per cent online sales levy for businesses with annual revenues over £1m, in addition to a 20 per cent reduction in business rates. Now is the opportunity to reform business rates and create a system that is fair and sustainable for all.”

Waterstones CEO James Daunt called business rates a “perverse tax, perversely applied”. He added: “It is starkly evident that they result in the loss of jobs and the degradation of communities most in need of support. They are indefensible in their present form, with the immediate consequence of failure to reform the certain loss of tens of thousands of valuable jobs”.

The issue of online retail superseding high street shopping has been starkly highlighted in recent weeks, with online retailer ASOS acquiring former Arcadia brands Topshop, Topman, Miss Selfridge and HIIT from administrators, while fellow online brand Boohoo acquired Debenhams and the remaining Arcadia brands Dorothy Perkins, Wallis and Burton out of administration. For all of these deals, only the intellectual property and brands were acquired, with hundreds of physical locations closing.

In response to the letter, a Treasury spokesperson said: “We’ve spent tens of billions of pounds supporting shops throughout the pandemic and are supporting town centres through the changes online shopping brings.”

“Our business rates review calls for evidence including questions on whether we should shift the balance between online and physical shops by introducing an online sales tax. We’re considering responses now.”


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