Several of Britain's largest retailers have jointly cautioned Prime Minister Andy Burnham that a proposed increase in business rates could lead to higher living costs, reduced investment, and job losses. The group, which includes Marks & Spencer, Tesco, Sainsbury's, Kingfisher (owner of B&Q), Morrisons, Primark, and Asda, has urged the government not to impose greater tax burdens on shops to fund lower bills for other businesses like pubs and music venues.
The concerns were voiced in a letter from the Retail Jobs Alliance, which also saw support from Usdaw, a union representing approximately 370,000 retail workers. The alliance stated that future tax policy changes should encourage continued investment by brick-and-mortar retailers nationwide. Last year, high street businesses faced an additional £7 billion in costs and taxes, encompassing business rates, packaging levies, and increased wages.
The coalition warned that these accumulating costs directly contribute to price increases for consumers. The letter emphasized that further tax hikes would strain retailers' capacity to offer competitive pricing and cost-of-living support initiatives. It also highlighted the integral role of retail stores in the revitalization of high streets, noting that continuous investment in communities is unsustainable under an escalating tax burden.
This warning comes as Prime Minister Burnham and Chancellor John Healey prepare to present their first Budget on October 28. The retailers' letter pointed out that businesses such as pubs and restaurants also depend on vibrant town centers with strong footfall and consumer spending, which are significantly supported by large retail establishments. Shifting the tax burden from hospitality to retail, the letter argued, risks damaging the entire high street ecosystem and diminishing the benefits of supporting entertainment venues.
Business rates are calculated based on the rental value of commercial properties and property size. The Labour party has already committed to providing pubs and music venues with a 20 percent discount on their business rates starting next spring, and has initiated a consultation on how these rates are calculated for pubs and hotels. Their manifesto also pledged to "level the playing field between the High Street and online giants."
However, retailers are concerned that premises with rateable values exceeding £500,000 may face higher rates from next spring. A higher multiplier was introduced last year for this property band, which includes large department stores, supermarkets, and online fulfillment centers. The Retail Jobs Alliance is advocating for an exemption for all brick-and-mortar retail stores from this increased multiplier.
Retailers also cited recent heatwaves that have raised concerns about food prices in the coming months, alongside rising energy bills for both retailers and food producers. They argue that increased business rates would severely impact investment, employment, and the overall viability of these major stores. The union highlighted recent youth unemployment figures, which showed nearly one million people aged 16 to 24 were not in education, employment, or training between April and June. Exempting shops, they concluded, would support job preservation and contribute to the foundation of vibrant high streets and communities.