In an interview with ITV News, the Chief Executive of Next has called on the government to reform business rates which he says are accelerating the rate at which high street shops close.
Lord Wolfson, a Conservative Party peer, says the tax on commercial property has not been updated to reflect the increasing popularity of online shopping and needs changing.
“The one thing that I think the government must do is make rates more responsive to today’s reality,” Simon Wolfson told ITV News.
“Let the thriving towns and cities, we should be paying high rates, but the ones that are dying, actually that process of failure is being accelerated by rates that are stuck at levels that don’t reflect today’s reality”.
The tax raises £30 billion a year for the government and local authorities. Demand for retail space has fallen to its lowest level since the last recession. Commercial property values and rents have tumbled but business rates, largely, have not.
“There are lots of our shops where we pay higher rates than we do rents”, Wolfson says.
“I would have more frequent revaluations, up and downwards revaluations, so the rates are a fair reflection of the value of that property”.
Wolfson admits he has no idea where the balance will settle or how many of the 530 stores Next has in the UK he will need in the years to come.
“If our customer wants to buy more online we have to gear up to do that, if they want to buy less in the shops we have to slowly shrink our store portfolio to make sure it is the right size.
“One interesting fact is that of the goods we sell online 50% of them are collected from a store and that’s what gives me absolute confidence that stores will be there in five or ten years’ time.”
Wolfson is arguing for business rates to be re-calibrated rather than cut.
He suggests the tax could still raise £30 billion for the government annually, but needs changing to ensure that successful retail locations shoulder the greatest burden.
“Give the unsuccessful a break,” Wolfson proposes.
He believes the gap between good and bad retail locations is getting wider and expects high streets to continue to empty. In his view, lower business rates for struggling communities offer the best chance of their reinvention.
There is a consensus that business rates have failed to keep pace with the times. The likes of Debenhams, Sainsbury’s and John Lewis have also complained that the tax hands Amazon and other online rivals an unfair competitive advantage.
Leave a Comment