The Chancellor delivered a mixed bag of news to retailers yesterday, cancelling the planned rise in fuel duty but ignoring pleas to freeze business rates in 2013.
Rates rose by 4.6% in 2011 and by 5.6% this year, adding more than half a billion pounds to retailers’ rates bills. But George Osborne’s Autumn Statement left retailers fearing that the further hike still due next year will only add to the woes of the high street.
The British Independent Retailers Association said that small shops were “sorely disappointed by the Chancellor’s decision to crank up business rates in 2013.
“The one-year extension to the small business rate relief scheme is a small consolation but will affect very few retailers and will certainly not add much stimulus to the high street. The need remains, BIRA believes, to reform fundamentally this property-based tax, which increasingly penalises town-based businesses in comparison to out-of-town and online operators.”
The British Retail Consortium also called the Chancellor’s failure to announce a business rates freeze “disappointing”.
Said director general Stephen Robertson: “The Chancellor should have removed the threat of a further 2.6%, £175m increase next April to avoid more empty shops. It’s welcome news that small retailers will benefit from relief for an extra year, but retail CEOs tell us a third successive substantial rates hike will deliver a further blow to investment and job creation.
“The government has already said it will review the mechanism for setting rates increases in future and introduce a fairer formula for the future. This needs tackling urgently.”
The Chancellor also announced that all newly-built commercial property completed between October 1 2013 and September 30 2016 will be free from empty property rates for the first 18 months, which was welcomed by the British Property Federation.
Chief executive Liz Peace said: “This is a welcome first step towards mitigating the damage being wrought by empty property rates…The government is rightly desperate to get Britain building again. Introducing a grace period for empty property rates for new development will remove a millstone from around neck of the property industry, and let it get on with what it does best – investing in our towns and cities, regenerating communities and building the offices, factories and shops in which we work.”
The Royal Institution of Chartered Surveyors also applauded the announcement. Said chief economist Simon Rubinsohn: “This will help take the brake off speculative development, provide a badly-needed boost to the wider economy and help to repair our struggling high streets.”
The BRC was less enthusiastic. “Giving a grace period to new-build premises should encourage speculative investment but, with one in nine shops already standing empty, more help to keep high street businesses trading in them would have been better,” commented Robertson.
The cancellation of January’s rise in fuel duty was, though, universally popular, and “exactly what we asked for,” Robertson said. “It will provide much-needed support for consumers. It will ease the pressure on household budgets, boost customers’ ability to spend and help hard-pressed retailers contain their transport costs.”
And BIRA agreed. “This will be good news for hard-pressed consumers and businesses alike,” it said. “They will also be pleased to see a sizeable uplift in the personal allowance and this will particularly benefit those at the lower end of the pay scale, most noticeably those paid at the National Minimum Wage rate.”
But it went on: “It is a pity, however, that the Chancellor did not see fit to help the jobs market more, with a full National Insurance holiday for new jobs. Independent retailers, which have been opening more new shops than are closing, employ roughly 10 staff members per shop, so encouraging this would be sensible in the face of the pressing need for growth.”