According to the research of The Centre for Retail Research 11,684 stores and shops have closed down in the UK in less than five years (as 2023 is only half way through and a meagre 523 have hit the rails so far, with 2,138 closing in 2022). Covid-lockdowns led to many smearing the inside of their windows with swirls of white paint and leaving curled up pamphlets on dusty doormats, and more than expected have not re-opened since then.
More determined shopkeepers have been trying to plough a furrow back to their front doors, only to be beaten back by rising interest rates and inflationary pressures. We British love an underdog and, for many, the howling beast slavering above them is our old foe 'the broken business rates system'.
Helen Dickinson is the chief executive of the British Retail Consortium and she is furious (really livid). She said today (Friday 28 July): “Currently, there’s an additional £400 million going on retailers’ bills next April, which will put a brake on the vital investment that our towns and cities so desperately need." We like Helen's style as she talked about 'gap-toothed high streets' and 'the need for local councils to have a cohesive plan for local shops', however most important she and her Consortium want Government to go one step further and freeze rates bills next year.
There appears to be an urgent need for this as in the second quarter of this year, the overall shop vacancy rate increased to 13.9 per cent, which was a 0.1 percentage point worse than the numbers for January to March 2023. Although bricks-and-mortar retailers only have 80 per cent of retail sales they are paying 94 per cent of all the business rates in the sector. Not shocking enough? Get this: retailers now pay 25 per cent of all business rates paid by UK companies.
NTI reported recently that UK business rates are usually reviewed every five years, but this is set to change to every three years in England with the next revaluation in 2023. Business rate valuations are then calculated using set rates known as ‘multipliers’, based on the size of your property and the way it is used. On average, a business will pay business rates equal to 50 per cent of their annual rent. As such, properties like a shop which has a higher rent price will likely incur a higher business rate than a stockroom.
So, who have we lost so far this year? We have said 'goodbye' to ... Le Pain Quotidien, Wilkies, UK Flooring Direct, Scotch and Soda, Hunters, Tuffnells and The Meatless Farm Company.
Jeremy Hunt has announced the 2023/24 Retail, Hospitality and Leisure Business Rates Relief scheme, which will provide eligible, occupied, retail, hospitality and leisure properties with a 75% relief, up to a cash cap limit of £110,000 per business.
But is it enough? ...