80,000 shops to close if business rates aren’t reformed

An interesting article has appeared in the Telegraph from the retail lobby which claims more than 80,000 shops face closure by 2017 unless the Government drastically overhauls the business rates tax system.

Following a study by the British Retail Consortium – hardly an impartial body to be fair – they say the worst case scenario could affect up to 800,000 workers and decimate high streets across the country.

The findings are based on retailers not renewing their leases on the 60% of high street stores that will see their rental agreements expire by 2017.

Even their “best case scenario” thinks there will be 8,073 fewer shops in two years’ time, putting 80,000 jobs at risk. That is worked out on the BRC basis that each shop closure costs 10 jobs – mmm, well, for me that is quite an assumption.

The report also seems to be assuming that of all those leases expiring in two years that Business Rates is the main, or one of the main causes behind businesses throwing in the towel. It doesn’t seem to be taking into account natural business expiration such as retirement, or expansion and moving to new premises. Some businesses will simply have run their course, with or without business rates.

The BRC has conducted the research as part of its submission to the Government’s review into the future of business rates. Business rates are estimated to bring in £28bn for the Treasury this year – more than council tax.

The BRC has made a series of short-term and long-term recommendations to overhaul the tax, which are similar to proposals from other industry bodies such as the CBI, such as extending relief for small businesses, scraping the annual inflation-linked increase in the tax, and conduct valuations of property every three years instead of every five.

The report makes a dramatic headline but it has more than a strong whiff of scaremongering about it. Not wanting to fall into the Paddy Ashdown world of predictions, but I would eat my VAT return if we honestly will see 80,000 shops close their doors in 2017 solely because of business rates.

Already submitted as part of its lobbying to the review, the BRC also says the doomsday scenario will only happen if business rates are not drastically reformed but surely that is what the current review is all about? I would have thought it would have made more political and PR sense to have launched this report nearer to the review findings coming out, or even in response to it if they don’t like its conclusions – and there is no sign or even a whisper from Whitehall that that is going to happen any time soon.