Shopworkers’ trade union leader Paddy Lillis has signed a joint letter with major retailers, including Tesco, Morrisons and Asda, calling on the Chancellor to use the upcoming Budget, on 3 March, to commit to fundamental reform of business rates focussed on reducing the burden on shops and businesses. Usdaw renews the call for an online sales tax as part of the union’s Save our Shops campaign.
Paddy Lillis, Usdaw General Secretary says:
“Usdaw has long called for the Government and retailers to work together to develop an industrial strategy and recovery plan for retail, so I’m pleased to join with leading voices from across retail and we urge the Government to listen and act.
“Nearly 180,000 retail job losses and around 20,000 store closures last year lay bare the scale of the challenge the industry faces. Each one of those job losses is a personal tragedy for the individual worker and store closures are scarring our high streets and communities.
“There are substantial issues that need to be addressed likes rents, rates and taxation, to create a level playing field between high streets and online retail. That has been clearly demonstrated by the recent sale of Arcadia brands and Debenhams to online only retailers, resulting in major names disappearing from our high streets.
“There must be fundamental reform of business rates. Retailers need clear and decisive action from Government to make this outdated and imbalanced commercial property tax fairer. An online sales levy set at 1% would raise around £1.5 billion, which could fund a cut in retail business rates of around 20%.
“Retail is crucial to our town and city centres, it employs around three million people across the UK. The Government must take this seriously; we need a recovery plan to get the industry back on its feet.”
Full letter to the Chancellor of Exchequer:
Reforming business rates to level up the economy
We are writing, as a coalition of retail companies and organisations representing thousands of shops and hundreds of thousands of employees across the UK, to urge you to use the upcoming Budget to commit to fundamental reform of business rates focussed on reducing the burden on shops and businesses. Even before Covid-19, the current system penalised physical shops and – whilst rates relief was welcome – failure to reform the system will hamper the recovery of the sector post-pandemic.
The Covid-19 pandemic has shown the critical role shops plays in local communities. Retail is the largest private sector employer in the UK and shops are anchors for employment, investment and growth in local areas. Retail employees, from large supermarkets and general stores through to smaller convenience stores and bookshops, have been on the frontline throughout the pandemic, ensuring critical supplies of food, medicine, and goods are available and delivered to customers.
The retail sector, however, faces challenges. Not all shops have been able to remain open during the pandemic, many have seen a sharp drop in footfall, and it has accelerated existing trends in the sector. Data from the Centre for Retail Research has shown that these trends, taken together, have led to tens of thousands of job losses and many retail closures in the past twelve months. They estimate that nearly 15,000 jobs have been lost already this year and that there will be many more to come.
These impacts are felt hardest in the Government’s priority areas – communities in need of ‘levelling up’. Research published last year showed that shops have a disproportionately significant role in providing investment and employment opportunities in communities in need of ‘levelling up’. In these areas retail is an anchor, delivering above average employment and investment. In Blackpool South, for example, retail supports one in every 6 jobs.
To support shops, and the communities they serve, the Government should implement fundamental business rates reform. Rates in the UK are the highest in Europe and retailers pay more than any comparable sector (if we take rates as a proportion of economic contribution). Moreover, evidence shows that the burden of rates on shops is highest in constituencies in need of ‘levelling up’. Analysis published last year, based on nearly 3,000 shops, found that nearly 80% of constituencies with the highest rates burden (rates as a proportion of profitability) are in the North and Midlands. In constituencies like Bishop Auckland in the North East, for example, shops can face a rates burden eight times that of similar stores in the South East. Put simply, rates are penalising shops in levelling up constituencies.
While we recognise the importance of business rates to the public finances, the current system is not sustainable and without reform shops at the heart of communities will be at risk. The Government’s ‘fundamental’ review provides an opportunity for bold action and there are two areas that require urgent reform:
- Reducing the business rates multiplier: The multiplier has risen from 35% in 1990 to over 50% today. The Government should significantly reduce the rate, focussing on a level closer to the historic norm of 35-40% of the market rent. This would make the UK more competitive and show the Government is backing British shops.
- Level the playing field on tax: Currently online retailers pay a lower proportion of tax per sale than bricks and mortar retailers. We urge the Government to rebalance the tax base to ensure online and bricks and mortar retailers pay a similar proportion of tax and we welcome the consideration of viable options in the Government’s ‘fundamental’ review.
Reducing business rates for retailers and rebalancing the tax system to ensure online retailers pay a fair share of tax would be revenue-neutral, provide a vital boost to bricks and mortar retailers and support communities in need of levelling up.
As organisations representing shops and shopworkers in every corner of the UK, we hope that you will take this opportunity for fundamental reform and consider our proposals. The benefits to the UK economy and the future of retail will be significant.
We would welcome the opportunity to discuss our proposals with you in further detail.
Paddy Lillis, of Usdaw General Secretary; Ken Murphy, CEO of Tesco; Thierry Garnier, CEO of Kingfisher; David Potts; CEO of Morrisons, Roger Burnley, CEO of Asda; James Lowman, chief executive of Association of Convenience Stores (ACS); Peter Pritchard, CEO of Pets at Home; James Daunt, managing director of Waterstones; Andrew Goodacre, CEO of British Independent Retailers Association (BIRA); Mark Bourgeois, managing director UK & Ireland at Hammerson; Jerry Schurder, head of business rates at Gerald Eve; Mark Williams, executive Director of Rivington Hark and former chair of HMG’s Retail Property Taskforce; Vivienne King, chair of The Shopkeepers’ Campaign; Philip Bier, CEO of Bier Retail; Lawrence Hutchings, chief executive of Capital and Regional; Allan Lockhart, CEO of NewRiver REIT; Scott Parsons, chief operating officer UKof Unibail-Rodamco-Westfield; and Morgan Garfield, managing director and co-founder of Ellandi.
Usdaw (Union of Shop, Distributive and Allied Workers) is the UK’s fifth biggest trade union with over 400,000 members. Membership has increased by more than one-third over the last couple of decades. Most Usdaw members work in the retail sector, but the union also has many members in transport, distribution, food manufacturing, chemicals and other trades.