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Business rates: Sainsbury’s boss urges ‘fundamental reform’

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Sainsbury’s chief executive has called for “fundamental reforms” to business rates amid concerns hikes could spark a raft of High Street store closures.

Mike Coupe said the set-up pegged to property valuations was “archaic” and ignored the rise of online shops based in out-of-town warehouses.

His comments came after business groups urged ministers to lessen the impact of April’s revaluation in England.

The government says the majority of firms will pay the same or less.

Properties concentrated in the South East of England and urban centres are said to be disproportionately impacted by the first revaluation since 2010, with retailers in some areas facing rises of up to 400%.

There is a similar debate taking place in Scotland and Wales where rates are also being reassessed after April.

Reality Check: Are there more winners than losers on business rates?

Mr Coupe, the boss of the UK’s second-largest supermarket chain, urged the government to undertake a wide-ranging review of the way businesses are taxed, highlighting changes in retailing culture.

Mr Coupe said: “The way it currently stands, there is an advantage for those without bricks and mortar operations, so there’s a strong case for a level playing field in business rates and taxation more generally.

“Businesses like ours with lots of property and employees face a bigger burden than others.”

Referring to the revaluation plans, he said: “As it stands, we could see High Streets face serious challenges and ultimately more closures. It could impact investment in places that most need it, in areas of the country where there is already a marginal call on investment.”


How are business rates calculated?

Rates are calculated by multiplying the rateable value of a property by a multiplier set by the government. But as property values change over time, rateable values need to be reassessed periodically – usually every five years.

However, this update to property values is two years behind schedule, making it a harder pill to swallow in areas where the price of real estate has been rising.


According to analysts, Sainsbury’s will see its annual rates rise to £500m, up from £483m, while internet giant Amazon will see its bill cut.

Pubs, NHS hospitals and hotels in some areas are also said to be facing increases in their business rates.

On Friday, business groups – including the British Retail Consortium and the CBI – signed a letter urging the government to drop the revaluation plans.

Pubs and restaurants have also called on the chancellor to dilute the impact of the changes by providing more transitional relief for the sector.

Meanwhile, the Sunday Telegraph has reported that ministers considered extra financial support to ease the impact of business rates before the general election in 2015.

According to the paper, the Department for Communities and Local Government worked with the Treasury to protect the sector, but eventually decided to adopt more modest reforms.

A government spokesman said: “Nearly three quarters of businesses will see a fall, or no change, in their business rates as a result of the revaluation.

“The generous reliefs we are introducing mean that 600,000 small businesses are paying no rates at all – something we’re making permanent so they never pay these bills again.

“Across the country, there’s also a £3.6bn scheme to support companies affected by the business rates revaluation.”

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