A prominent agency says tomorrow’s Autumn Statement is the Chancellor’s last chance to come good on the election promise to lower the burden of business rates
Colliers says Jeremy Hunt must support the high street by freezing the multiplier for all sizes of business preventing 6.7 per cent business rates hikes next April
John Webber, Head of Business Rates at Colliers, says that currently the business rates multiplier used to calculate rates bills is at a high 51.2p for every £1 of a commercial property's rateable value, and 49.9p for small businesses.
He adds that given business rates bills rise in line with inflation, based on this year’s September Consumer Price Index figure of 6.7 per cent, means rate bills are likely to soar next April unless action is taken.
Colliers estimate this will put an extra £1.74 billion on the rates bill across the board, with the retail sector alone seeing an increase of around £480 million in April.
The sector will be hit even harder as business rates reliefs are expected to come to an end at the same time unless a further extension is announced.
A similar dire effect will be seen in the hospitality sector, where UK Hospitality calculates the sector will see a £234m rates rise in April if no action is taken.
Last year the Chancellor froze the multiplier across the board to help businesses facing bill rises, but in the run up to this year’s Autumn Statement, the Chancellor has hinted only about supporting smaller businesses, saying nothing about supporting the bigger retailers or hospitality chains.
Colliers says this has led to industry fears that whilst the Chancellor might freeze the smaller business rates multiplier, the multiplier for larger businesses will be allowed to rise with inflation.
“This will be a massive hit to the high street” claims Webber.
“Although most businesses in the retail and hospitality sectors have benefited to some extent from the 2023 Revaluation, the sectors are still under pressure facing higher occupational costs across the board as energy, employment and insurance costs soar.
“The larger retailer and hospitality companies are the main employers in their sectors. Hitting them with a 6.7% rise in their rates bills next April will have a dire impact and certainly dampen expansion and growth plans and for some businesses might be the last straw.
“The situation is even more bizarre when we see the current inflation figure has already fallen to 4.6 per cent and may be around 3.0 per cent next April, but we would see such businesses tied to the 6.7 per cent figure for the year.”
“If the Chancellor does not support those retailers and hospitality companies with multiple stores or outlets, we will continue to see the trail of bankruptcies we have seen from such chains in recent years from Toys r Us and Laura Ashley and Carluccio to most recently TM Lewin and Wilko.”