Michelle Buxton, CEO of Toolbox Marketing and Revo Board member, believes that the Chancellor’s Budget announcements earlier today have made things worse for retail and leisure businesses.
“Many retail and leisure businesses are reliant on the 75% business rates relief and with this now reduced to 40% and with minimum wage and national insurance contributions increasing, while the multiplier remains static, or is set to increase, cost increasing will be painful for those in the retail and leisure sector.
“Although we welcome the promise of a business rates discount for retail from 2026, it is kicking the can down the road and does little to encourage investment and innovation across the retail and leisure sector, in line with the government’s growth agenda.”
She says Revo’s recently released Future Insights found that a thriving retail and leisure sector had the potential to unlock economic growth across the UK. While a recent joint study between Revo and Lambert Smith Hampton found that 71% of people believed business rates reform was the most useful government intervention to support town centres.
“By failing to go further to address this major barrier to entry for those seeking to support the retail and leisure sector, this Budget announcement has missed the chance to secure increased investment which would have created safe and thriving communities and led to economic prosperity across the UK.”
Neil Hockin, head of shopping centre leasing and joint MD at Lunson Mitchenall adds: “Stability in the sector is hanging in a delicate balance, especially across the UK’s 750 towns and cities outside of major retail hubs. We had a chance to lay a foundation that goes beyond traditional economic measures and I really do think it is a missed opportunity to have not done more to unlock retail and leisure growth and pro-actively support these local economies with more community-centred policy approaches.
“I am not doubting the need for more housing and infrastructure and whilst it’s great to see more effort in reducing anti-social behaviour and retail theft, increasing civic pride would go further than any increase in punishment. The sector both contributes approximately 8% of the UK’s GDP and supports around 6.5 million jobs, but also holds great social value in terms of building community identity. Today’s budget could have been the catalyst for a brighter, more resilient future for these towns and communities. Going forward, this cannot just be a recommendation; it’s a necessity.”
Meanwhile, Helen Dickinson, chief executive of the BRC, said: “Retailers are counting the cost of today’s Budget: over £2.3bn in increases to employer National Insurance contributions; £367m due to the larger-than-expected rise to the National Living Wage; and a £140m hike to next April’s business rates. These costs come into effect from April next year and are on top of other upcoming regulatory costs and an estimated £300-800m of extra costs from the implementation of the Employment Rights Bill.
“Retail employs three million people and 2.7 million more across supply chains, driving investment in jobs, communities and, ultimately, economic growth, right across the country. For a low margin industry, today’s Budget will hit hard, with the odds now stacked firmly against growth and investment in the short term. These new costs also risk increasing the prices customers pay at the till.
“As the industry prepares for over £2.5bn in new costs in 2025, improvements to the business rates system will not come until 2026. We welcome the recognition that retail, along with hospitality businesses, should pay lower rates. But with the detail still to be worked through, it is unclear whether this will address an imbalance which sees retail, as 5% of the economy, pay 21% of the total business rates bill. In order to stimulate investment, it is vital these changes reduce the overall costs on the industry, rather than simply shifting the burden from one part to another.”
Dickinson said the BRC welcomed the Chancellor’s firm stance on shoplifting, with the announcement about extra funding aimed at tackling a scourge that costs the industry over £1.8bn.
“This is on top of the scrapping of the low-level shoplifting threshold, which has resulted in many police forces ignoring smaller crimes. Working closely with the police and Government, retailers are determined to tackle retail crime – from shoplifting, to violence against retail workers.”
Desperately disappointing
Back to business rates and John Webber, head of business rates at Colliers, commented: “The Chancellor’s announcements concerning business rates today were desperately disappointing. Despite pre-election promises of business rates reform, nothing of significance was announced. There is to be no consultation, just a discussion document,and the measures announced hardly put a sticking plaster over the gaping wound rather bringing in any fundamental reform.”
He added that the outlook for the high street was not good either. “The Chancellor said she was heading off the knife edge that the retail/hospitality/leisure sectors might face, when the 75% discount relief that sector currently enjoys, comes to an end in April 2025. She announced:
- A 40% business rates relief for the retail/hospitality/leisure to 2025/6 capped at £110,000 per business.
- From 2026/7 two permanent lower tax rates for businesses in the retail/ hospitality/leisure industries
- Freezing the small business multiplier at 49.9p
“Far from heading off a cliff edge, the Chancellor’s measures potentially are driving the sector to the wall. By replacing the current 75% discount to business rate bills, with a discount of 40%, those businesses currently eligible for the relief will see their business rates bills actually rise by a massive 140% next year.
“Moreover in 2026/7, despite the two permanent lower multipliers for retail/hospitality /leisure, many businesses in the sector will still see their rates bills rise significantly as a result of the 2026 Revaluation.
“Through discussions with the VOA we have also learnt that these measures, together with freezing of the smaller business rates multiplier, will be funded by introducing an even higher multiplier for larger businesses (those with an RV of over £500,000.) This will include businesses in the retail, hospitality and leisure sectors too.
“So, the bigger businesses, the ones that actually create the jobs will be hit for six. I fail to see how any of these measures help the high street in the long term.
“Like the government before her, the Chancellor has failed to tackle the business rates issue. There has been no pledge for business rates reform across the board, no attempt to freeze the larger multiplier or to bring it to a sustainable level that businesses can afford, nor to tackle the business rates deserts we see in some parts of the country, nor to reform the creaking appeals system. Far from saving the high street we have a potential disaster looming. “
Also on business rates, Florian Wupperfield, CEO of LCD Ventures, said:“The Chancellor’s commitment to reforming business rates is a promising step, but it is unfortunately not a silver bullet to saving Britain’s struggling retailers and high streets. The much-needed business rates reform must now fit into a holistic approach that considers the diverse needs of Britain’s high streets, and prioritise local businesses and SMEs over large conglomerates.
“The UK needs vibrant, thriving high streets which have a well-balanced social infrastructure, where smaller local businesses can compete with bigger brands. If we can create an environment to allow this to happen, the UK’s high streets will retain their unique culture and identity that make Britain so unique for locals and visitors alike.”
