Retailers are bracing themselves for a steep hike in Business Rates next year. The September Retail Price Index (RPI) figure announced this week it would hit retailers with £175 million in extra costs, posing a significant threat to the health of the British high street.
The British Retail Consortium (BRC) issued a stark warning that a 2.6 per cent increase in rates in April 2013 would seriously impede retailers' ability to invest and create jobs, especially for young people. Business rates have already risen dramatically in both 2011 (4.6 per cent) and 2012 (5.6 per cent), a cumulative increase of more than half a billion pounds.
Through its Fair Rates for Retail campaign, run jointly with industry magazine Retail Week and backed by many top retail Chief Executives, the BRC is calling on the Government to freeze business rates in 2013 in order to support jobs and growth during tough trading conditions.
As a consumer-focused sector that uses large amounts of property across the UK, retailers already pay 28 per cent of all business rates. They would be hit disproportionately hard by a 2.6 per cent rise next April.
The campaign also calls on the Government to honour its commitment to review the mechanism for setting rates increases, and to introduce a fairer, more sustainable formula for the future. The BRC favours basing business rates increases on an annual average of the Consumer Price Index (CPI), rather than the lottery of taking only September's RPI.
British Retail Consortium Director Stephen Robertson said: "This RPI announcement reveals the scale of the potential damage to our high streets that will follow if the Government follows previous practice and translates it directly into next April's rates increase.
"The retail industry is the UK's biggest private sector employer, providing crucial first jobs to a million 16-24 -year-olds. Expecting retailers to bear a huge rates hike for the third year running can only lead to fewer chances of work, less investment and more troubled high streets.
"The Government must recognise that retail has already contributed its fair share to the Exchequer and freeze business rates in 2013. It also needs to reform the mechanism for setting future increases so that it is fairer and less volatile."