John Lewis Partnership Chairman Jason Tarry has warned that proposed changes to business rates could lead to further high street closures, with larger retailers facing increased costs that could also affect neighbouring independent businesses.
Mr Tarry has criticised plans for a so-called ‘warehouse tax’, arguing that higher property taxes on larger retail premises could disproportionately affect department stores and supermarkets rather than online-only businesses.
Writing in The Telegraph, he described the proposals as demonstrating a “fundamental misunderstanding of how modern high streets work”.
He stressed that larger retailers play an important role in attracting shoppers to town centres, generating footfall that benefits surrounding independent shops, cafés and restaurants.
As a result, he warned that making larger stores less financially viable could have wider consequences for high streets and the smaller businesses that depend on them.
The intervention comes ahead of the Chancellor’s Autumn Budget on 28 October, with retailers continuing to call for reform of the business rates system.
According to Mr Tarry, the John Lewis Partnership currently pays approximately £170 million annually in business rates, making it the company’s largest tax expense and its second-biggest operating cost after wages.
He revealed that changes to the system have already resulted in more than 200 John Lewis and Waitrose stores facing higher charges, compared with just 18 of the Partnership’s distribution centres.
Despite the measures being intended to address the tax imbalance between online and bricks-and-mortar retailers, around 80 per cent of the additional burden has fallen on its physical stores.
While acknowledging that online retailers should contribute their fair share, Mr Tarry argued that increasing costs for businesses operating physical stores could discourage investment and ultimately lead to closures.
He has called on the Government to ensure that no high street shop faces higher taxes as a result of future business rates changes.
The warning comes as John Lewis continues to invest in its physical retail estate, with £50 million being spent on its department stores this year. The Partnership also plans to open three new Waitrose branches and refurbish a further 28.
Mr Tarry emphasised the importance of a stable and predictable tax environment to enable retailers to continue investing in stores, jobs and local communities.
However, according to reports from Sky News, the Treasury is understood to have ruled out further tax increases on warehouses in the upcoming Budget.
His comments follow similar concerns raised by Marks & Spencer Chief Executive Stuart Machin, who has also urged the Government to reconsider the business rates burden facing high street retailers.
The debate is particularly significant for independent housewares retailers, many of which rely on the presence of larger stores to attract customers into shopping areas. Any reduction in town centre footfall could place additional pressure on smaller businesses already contending with rising operating costs.
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