Could business rates revaluation really have saved BHS?
There have been many, many headlines over the last few weeks regarding the demise of BHS but it was one story this week that caught my eye: where the government’s failure to implement the 2015 rating revaluation can be partially blamed for the collapse.
It has been argued by Colliers that the revaluation would have saved the BHS £15m a year, amounting to a £75m saving over the five years. The current 2010 Rating List is based upon 2008 values pre- the economic crisis. A revaluation was due in 2015 but was controversially delayed by the Government in 2013.
With a business rates bill of £44m a year it was certainly a heavy burden for BHS but to say it was fully to blame for the eventual collapse is stretching the figures somewhat. For many years I have been a pretty vocal critic of the post-ponement that has given respite to healthy businesses in the South East and London, at the expense of thousands of firms across the country that could have done with a boost when the hard times really took hold.
Yes, a £75m saving is a substantial sum of money in anyone’s eyes but it doesn’t come close to covering even a quarter of the pension black hole of BHS. It is even less than “Sir Phil” has offered to cough up as a sop to Parliament and the industry regulators who are now crawling over the deal he struck when selling the chain for £1 to a business non-entity with a bankruptcy track record to boot.
Whether the likes of Mike Ashley or other suitors can save any remnants of BHS remains to be seen, but at least the new rating list due next year will afford the new owner some savings across the 400+ branches nationally – just like the thousands of other businesses which have suffered over recent years but without the political interest, evidently, in their struggle to survive.
Tory peer Lord Wolfson has said that business rates need to be updated to reflect major changes in retail.
Should relegation from the Premier League be classed as a Material Change of Circumstances when it comes to rating?
Now that I have written about Wales recently it’s only fair I switch to our more northerly neighbours.