‘ Northern shops tax’ exposed as rates burden far lower in South

SHOPS across Yorkshire and the Humber are faced with a much higher business rates burden as a proportion of earnings than those in the South, according to a report out today.

The study by consultancy WPI Strategy, authored by former Treasury economist Chris Walker, uses data from Tesco’s 2,700 stores across England and Wales to highlight the regional divide which it has dubbed a “Northern shops tax”.

It found that 77 per cent of constituencies in the top 10 per cent of rates burden are in the North and Midlands, compared with just 18 per cent in London and the South. This is because the tax rate does not mirror economic performance, so for areas facing economic challenges the burden is much higher.

Some 23 Yorkshire and Humber constituencies are paying higher business rates as a proportion of earnings than the rest of England and Wales.

Sheffield South East, for example, has a business rates burden 81 per cent above the England and Wales average and Bradford West 64 per cent.

The new report, Open for Business, combines the data on the business rates burden with a new Levelling Up Index, which uses six socio- economic indicators to assess every parliamentary constituency in England andWales in terms of their levelling up needs.

It found that more than half of the region’s constituencies are in need of levelling up, with Bradford West, Grimsby, Bradford East, and Hull West and Hessle in the top 10 nationally.

Report author Mr Walker said: “This analysis shows, for the first time, which areas of the country need levelling up.

“It also shows how far a single policy change could deliver massive benefits to these communities: reducing business rates.

Most other taxes are linked to prosperity and are progressive, but in the case of business rates that system has broken down.

“Communities around the UK simply need a level playing field and a business environment which fairly reflects the benefits of trading in every nation and region of the UK. Making the changes we suggest in this report would support our most at- risk high streets and help hundreds of communities to thrive.”

The report makes a series of recommendations including reducing business rates to a fixed, 40 per cent tax rate for retail to support shops in the UK’ s regions.

Waterstones managing director James Daunt said: “In many towns across the UK, and especially in the north of England, the cost of business rates jeopardises the continued existence of our bookshops, as it does that of so many other retailers.”

Conservative MP for Wakefield Imran Ahmad Khan added: “This Conservative government was elected on a manifesto that promised to level up parts of the United Kingdom that have been left behind.

“Ensuring a thriving business community will be vital in achieving this objective, which means looking at reducing business rates, which are disproportionately higher in the north of England than the South, and incentivising a rejuvenation of our high streets.”

The Government is undertaking a business rates review, which due to conclude next spring.

Retail, leisure and hospitality companies with a rateable value of less than £ 51,000 were given a business rates holiday due to coronavirus earlier this year.

In the case of business rates, that system has broken down. Former Treasury economist Chris Walker.