Shops’ unfair burden

UNECONOMICAL, unsustainable and, frankly, unintelligible. This is how Confederation of British Industry president John Allan describes the business rates system, which is fuelling the crisis on high streets. And who could disagree with him?

Companies pay this onerous tax based on an estimate of what their property would cost to rent for a year. But with shoppers increasingly turning to the internet, or huge out-of-town retail parks, the real value of high street shops has plummeted.

The problem is, however, that business rates have remained artificially high, leading to countless closures and great swathes of the high street left empty.

The situation is worse in Scotland, with larger firms enduring a ‘large business supplement’ double the equivalent rate south of the Border. Against a backdrop of retail administrations causing an increasing blight of empty units on high streets, governments and councils should be doing all they can to tackle the problem.

In 2015, then finance secretary John Swinney gave councils the power to cut business rates bills for under-pressure firms to prevent store closures and encourage investment. Today, it is revealed only two local authorities offered this relief to struggling firms last year – handing out a measly £61,000 in savings. UK Communities Secretary James Brokenshire has at least recognised the problem by outlining proposals including slashing parking charges and allowing commercial premises on the edges of town centres to be converted to residential use.

But much more radical action is needed if the high street is not to fade and die. Digital retailers must be made to pay their fair share of tax to create a more level playing field. And government must realise that if the rating system is not overhauled to reduce the unbearable burden on small and medium businesses, ever more shops will lie vacant and the revenues that local authorities rely on will simply dry up.

The golden goose will have been killed by slow and relentless strangulation.