How much more can our high streets take?

Pressure mounts on Chancellor to help small shops after it emerges business rates are set to rise by ANOTHER £728m

PHILIP Hammond is under growing pressure to use this month’s Budget to help save the High Street as stores prepare for another crippling business rates rise.

The total bill for next year’s rates will go up by £728million at a time when shops are fighting for survival amid an online shopping boom.

The 2.4 per cent increase in the £31billion bill was calculated after the publication yesterday of the inflation figure for September, which is used to determine April’s business rates rise in England.

Angry retailers said last night the increase would inevitably lead to more store closures and job losses. More than 50,000 retail jobs have already been lost this year.

Critics said it was deeply unfair that internet giants such as Amazon and Asos pay very little in business rates because their premises are out-of-town warehouses. Marks and Spencer, for example, paid £184million in business rates last year compared with Amazon’s £14million for British and Welsh warehouses.

The Chancellor is facing pressure to introduce a so-called ‘Amazon tax’ on the internet giants to try to level the playing field, while some have called for a freeze on business rate rises to give struggling high street stores some relief.

Mike Cherry, chairman of the Federation of Small Businesses, said: ‘The Chancellor must provide targeted support to those businesses struggling to keep their heads above water. It’s vital that businesses are given the right support in the form of a rates freeze from April 2019, when the next inflation-linked rise is due.’

Liberal Democrat leader Sir Vince Cable said: ‘The Chancellor has got to tackle the issue of business rates, which are causing mounting anger, are a tax on business improvement, and create a disadvantage against tax-dodging tech multinationals.’

Shadow Chancellor John McDonnell demanded a crackdown on tax avoidance by Amazon and other online giants. ‘The current business rates system is crippling Britain’s high streets but Philip Hammond is refusing to do anything about it,’ he said. ‘We need action so jobs and local communities don’t continue to suffer.’

The Mail is campaigning for reforms that will give bricks-and-mortar stores a level playing field with online rivals.

Ministers have been dropping broad hints that Mr Hammond’s Budget at the end of the month will include some reforms to help the High Street. The 2.4 per cent rates rise, in line with the September inflation figure, means most companies will have to pay 50.5p in the pound, according to analysis by consultants at Altus Group.

This would be the first time the 50p threshold has been passed since the tax was introduced in 1990.

In the retail industry, this could mean the difference between profit and loss. The rise will hit stores of all sizes from corner shops to department chains, as well as manufacturers and white-collar firms.

It follows a jump in costs after premises were revalued last year to take account of rising property prices. Debenhams boss Sergio Bucher warned that surging property costs are the biggest challenge facing the High Street.

Writing for the trade magazine Estates Gazette, he said: ‘While nearly all of our 166 UK stores are profitable today, extrapolate current market trends three to five years forward and that picture is going to change.’

John Webber, of property firm Colliers International, said: ‘Further increases are unsustainable. This could impact decisions to either close or keep open stores.’

Robert Hayton, of Altus, added: ‘Our high streets are engulfed in crisis. It is time for the Chancellor to take a step back and support business through an unprecedented stimulus by freezing rate rises next April.’

Mr Hammond faced pressure from his own backbenchers last night, with former Tory chairman Grant Shapps saying: ‘After years of struggle, the High Street deserves a boost and there’s no better place to start than ensuring a business rate-friendly Budget.’

Fellow Tory MP Robert Halfon said: ‘The Chancellor must scrap or curtail business rates for independent shops and they should also get tax breaks.’

A spokesman for the Treasury said: ‘We’ve introduced more than £10billion of business rate support to help our high streets, so many bricks-and-mortar businesses now pay no rates at all. We’ve appointed an expert panel of industry leaders… to diagnose the issues affecting our high streets.’

HOW many more high street shops must be driven to the wall before ministers bring the outdated business rates system into line with the realities of 21st century retailing?

Consider the photographs on Page 6 of Barnsley in South Yorkshire, where the shutters are coming down on longestablished family firms, forced out of business as rates keep rising inexorably.

Now travel just six miles up the road to Grimethorpe, where the online giant Asos ( which yesterday posted sales of £2.4billion!) pays rock-bottom rates on a warehouse the size of six football pitches.

It’s not merely unjust that town centre shops bear a vastly disproportionate burden of this archaic tax, based on notional rental values. The unfairness is sucking the commercial heart out of communities all over the country.

Yet still the pressures mount. As the Mail highlights today, rules linking business rates to inflation mean the tax is due to rise by an eye-watering £728.2million in April. For many struggling to survive, this could be the last straw.

Yes, this paper understands local councils’ hunger for funds to meet the extra responsibilities piled on to them. But it makes no economic sense to keep squeezing the high street – denying small firms the air they need to breathe and expand – while letting cash-rich giants such as Asos and Amazon escape lightly.

When it comes to raking in money through stealth taxes, successive chancellors have often ignored inflation, freezing thresholds and thus dragging thousands of middle earners into the higher-rate band.

So just for a change, how about offering a stealth relief to firms – by freezing business rates? The very survival of countless high street shops could depend on it.

As for any shortfall in revenue, it cannot surely be beyond Whitehall’s wit to devise a rates system that takes account of retailers’ ability to pay. It’s high time the online giants shouldered their fair share.