Retailers across the nation’s flagship high streets are facing rising costs while many are considering reviewing their investment strategies and some are potentially facing permanent closure, a new report has stated.
According to fresh analysis from pro-growth group High Streets UK, rising operational costs is the most pressing issue businesses are facing.
The government confirmed changes to employers’ national insurance and the national minimum wage in last year’s Autumn Statement, but the proposed creation of a new ‘super tax’ business rates multiplier is currently undergoing a consultation period.
Properties set to be affected by the new ‘super tax’ multiplier are those with a rateable value of over £500,000.
The survey revealed that the majority of businesses set to be impacted by the new higher multiplier (69 per cent) will seek to manage costs by reviewing staffing requirements – threatening up to 5,500 jobs in these locations.
64 per cent of those impacted businesses will consider passing on the additional costs to consumers, with analysis suggesting that prices would need to rise by around 3 per cent to offset the increased tax burden.
A third of affected businesses are considering reviewing their investment strategies in the UK (34 per cent) or closing certain locations (31 per cent) as a result. This could put up to 600 trading units at risk, with over 200 potentially facing permanent closure.
Despite government claims the proposals will target online giants, properties subject to new higher ‘super tax’ multiplier are 5.1x more likely to be in flagship high street locations like Birmingham, Liverpool or London than anywhere else.
Often leased or owned by large retail, hospitality or leisure operators, or professional services firms, these businesses could be subject to a collective increase in business rates liabilities of up to £69 million.
Dee Corsi, chair of High Streets UK and chief executive of founding member, New West End Company, commented, “We welcome the long overdue review of the current business rates system.
"However, current proposals place too great a burden on the UK’s flagship high streets, undercutting the Government’s national growth ambitions.
“Our survey of businesses up and down the country clearly shows that the plans would be a disaster for jobs, investment, growth and ultimately, lead to higher prices for consumers.
"We urge the Government to take on board our concerns and reconsider their proposed reforms to protect flagship high streets, attract inward investment, support growth, and create a fairer system for all.”
Earlier this month, High Streets UK met in Liverpool for its first quarterly policy forum on business rates.
Key policy recommendations include conducting a full impact assessment of proposed multiplier increases; freezing any hike in the higher multiplier until 2027/28 to provide greater certainty; and ring-fencing rates for investment in the local flagship high street area, so those who pay the highest rates see a positive impact on services on their doorstep.
