Leading business expert backs call for cut in business rates

24th August, 2015

The Government’s “business tsar”, Sir Charlie Mayfield, has backed an emphatic call from retailers to overhaul business rates in the UK.

The chairman of the John Lewis Partnership and president of the British Retail Consortium (BRC), has got behind a chorus of complaints from retailers that the hefty business rates tax is hampering investment in the sector.

95 per cent of retail bosses surveyed by the BRC said that a reform of business rates would boost the nation’s productivity.

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Speaking to the Telegraph, Sir Charlie said: “Business rates bills have continued to rise when property values have fallen.”

“Retailers are now paying £2.40 in business rates for every £1 in corporation tax. Reforming the rates system would be a welcome boost for retailers and help drive investment in training and technology,” he added.

It was recently revealed that the UK is now around a fifth less productive per worker than the G7 average. This has become a sore point for the Government and last month led to business secretary, Sajid Javid, launching a plan to lessen the gap between the country and the US.

As well as promising a “red tape bonfire”, the Government has also been encouraging businesses to speak up about the regulation that was making them less productive. As part of the plans, Sir Charlie agreed to spearhead a business-led action group to encourage investment and productivity. Business rates are the Government’s sixth largest stream of revenue after income tax and national insurance and are expected to bring in £28 bn this year.

In the summer Budget, George Osborne announced that retailers would face a £4.9bn increase in business rates equivalent to 17.5% by 2020.

Business rates date back to 1601 and are currently calculated according to rental values. They have been described “cumbersome, massively expensive to go through, bureaucratic and not fit for purpose in the modern retail world”, by retail magnate and Dragons’ Den star, Theo Paphitis.

Paphitis also highlighted the point that business rates at some of his shops cost more than the rent.

He went on to say: “The Government can’t expect retailers to be investing in IT, modernising shops and hiring more staff to boost productivity, while also raising business rates and the national living wage”.

Founder of shoe repairers Timpsons, John Timpson, said that high rates had led to the closure of some of his stores.