Major Retailers Warn Burnham Against Further Business Rates Rise

Some of Britain's biggest retailers have warned Prime Minister Andy Burnham that increasing business rates for larger stores could put pressure on prices, investment and jobs.

The warning was delivered in a letter from the Retail Jobs Alliance, whose members include Asda, Marks & Spencer, Morrisons, Sainsbury's and Tesco.

The alliance represents food and general merchandise businesses that collectively employ nearly one million people across the UK.

Usdaw, the shopworkers' union representing 370,000 members, also signed the letter, which was sent to the Prime Minister last week.

Retailers are concerned that Chancellor John Healey could increase the higher business rates multiplier in his forthcoming Budget to help fund reductions for pubs, clubs and live music venues.

The higher multiplier currently applies to properties with a rateable value exceeding £500,000. Retail executives fear that raising it would place additional pressure on larger supermarkets and other major stores at a time when businesses are already facing rising operating costs.

According to the Retail Jobs Alliance, approximately 4,000 stores fall above the £500,000 threshold and collectively employ one in three retail workers.

The group warned that any further increase would "severely impact investment, employment and the viability" of these stores, many of which operate as important anchors for high streets and shopping centres.

The alliance said retailers support the Government's commitment to securing growth across the country, as well as its recently announced 20 percent business rates reduction for pubs, clubs and live music venues.

However, it argued that supporting hospitality businesses should not come at the expense of retailers operating physical stores.

The group described the high street as a single ecosystem, warning that increasing taxes on shops while cutting rates for hospitality businesses could weaken town centres rather than revitalise them.

It said retail contributes 21 percent of all business rates despite accounting for 5 percent of UK economic output. The alliance also claimed that last year's autumn Budget added £7 billion in costs and taxes to the sector.

For supermarkets, additional business rates would become another operating cost alongside employment, energy, transport and supply chain expenses.

The alliance warned that further increases could limit retailers' ability to keep prices competitive and support customers through cost of living initiatives.

It has urged the Government to exempt all bricks-and-mortar retail stores from the higher business rates multiplier as it considers how to rebalance taxation between high street businesses and online operators.

The Government has said its recently announced rates reduction will benefit nearly 32,000 pubs, clubs and live music venues from April next year, saving the typical pub an estimated £1,100 annually.