'17,000 shops at risk of closure' with current business rate system

More than 17,000 shops are at risk of closure over the next decade unless the Labour government overhauls the business rates regime, supermarket Sainsbury’s boss and the general secretary of the biggest retail union have warned.

Simon Roberts, the chief executive of Sainsbury’s, and Paddy Lillis, the general secretary of the Union of Shop, Distributive and Allied Workers, have called on the Labour government to do away with "outmoded business rates" system.

"Retail has been transformed over the past ten years, with online sales tripling to 27 per cent of total retail sales last year. But the business rates system is unchanged, reflecting an era when virtually all shopping was done in stores. This is why since 2018 more than 6,000 stores have closed, from small independent retailers to decades-long household names. Two thirds of closed stores cite business rates as a key factor in shutting up shop."

Writing for The Times, Roberts and Lillis further added that a headline cut to business rates of 20 per cent could safeguard and create more than 17,000 jobs and deliver an extra £70 million per annum to the Treasury after ten years.

"It could also boost GVA (gross value added) — the value of the goods and services produced, minus the value of the intermediate inputs that were used to produce those goods and services — by £400 million per year.

"A 20 per cent cut to business rates would create jobs, protect government funding and unlock the much-needed growth we all want to see," wrote the two retail figures.

Supporting the 20 per cent cut, a recent research by Development Economics states that a headline rate cut of such a magnitude would initially reduce tax revenues for the Treasury, but after ten years, the corresponding increase in economic activity would generate net positive returns of £70 million per year for the government.

Labour Party had promised in its election manifesto that if it comes to power, it will overhaul the business rates system to create a more level playing field between digital and bricks-and-mortar retailers as digital retailers often have lower business rate bills owing to their minimal property footprint.