CBI report

Business rates reform call to safeguard retail

Braehead shopping centre
Shops are seeking a fairer deal on rates

Urgent reforms are being demanded to the UK’s business rates system and apprenticeship levy to support the retail and wholesale industries.

New research by CBI Economics, conducted on behalf of the CBI and its retail members, reveals retail and wholesale activity is now worth £352billion a year to the UK economy.

It supports one in five of the nation’s jobs, with 5.7 million people employed within the sector or its suppliers.

In Scotland alone, the sector is worth £24.7 billion to the economy and sustains 417,993 jobs – around 17-18% of jobs in Edihburgh, Glasgow, Aberdeen and Dundee.

The CBI and retail sector say the £50billion retailers and wholesalers pay nationally in taxes is enough to fund 110 new hospitals a year. 

However, they are concerned that an inflation-linked 10% business rates hike due in the spring risks plunging many firms into a fight for survival.

A slow revaluations system also means retailers and wholesalers say they are already overpaying, with many facing liabilities as high as rents.

The CBI – supported by the Scottish Retail Consortium (SRC) – is urging the Scottish Government to both rethink any rise in rates and implement longer term reforms which reward investment.

The Scottish Government, they say, could take steps now by bringing forward their commitment to ensure the Large Business Supplement is brought into line with rates in England, ensuring firms are not facing a longer-term competitive disadvantage during the current cost-of-doing business crisis.

The CBI is also keen to see greater flexibility in the apprenticeship levy, a move which could have an enormous impact on a sector which already spends £4billion a year on training. This amounts to a tenth of all training spend in the UK. 

Together, these measures could generate renewed optimism and investment in a sector which plays a vital role in Scottish communities, the wider economy and the growth prospects for UK plc.

CBI Scotland Director Tracy Black said:  “We are asking the Scottish Government to smooth the looming Business Rates cliff edge; without intervention to freeze business rates in 2023, firms face the possibility of eye-watering rises which present an existential threat for many businesses that communities depend on.

Tracy Black
Tracy Black: ‘eye-watering rises’ (pic: Terry Murden)

“Longer-term reforms which encourage investment and fresh thinking on the Apprenticeship Levy can help future-proof the sector and spur further growth.”

Mohammad Jamei, Director of CBI Economics, said: “The retail and wholesale sector has undergone significant change over the recent decade and is on the cusp of digital transformation. It has also been a key sector delivering for its customers and its employees throughout the challenging times of recent years.”

David Lonsdale, director of the Scottish Retail Consortium, said:  “The CBI’s new report demonstrates the enormous economic and social contribution that the retail industry makes to Scotland’s communities.

“Retailers have shown tremendous fortitude and resilience to come through the tribulations of the past few years, continually adapting their business models at pace to meet evolving customer expectations. 

“If the industry and the broader ecosystem it supports is to flourish and fulfil its potential over the decade ahead then change is required from policy-makers. It’s crucial we see a more strategic and collaborative approach from government towards nurturing the growth of the industry, coupled with concerted action to reduce the burgeoning cost of doing business.

“This will help retailers keep down prices for customers, rejuvenate our high streets and city centres, and sustain tax revenues for government.”

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