[Commentary] Can scrapping business rates revive UK retail?

By Vivienne King, Chair of the Shopkeepers’ Campaign

It is impossible to read the news without seeing the latest election speculation or a reminder that the Conservatives are at record-low polling. Much of this conjecture starts and finishes with the election. Everyone is predicting a Labour landslide, but what will a Labour Government actually mean for the bricks and mortar retail community?

For many, the decline in the look and feel of their local high street in recent years has been tangible and glimmers of promise have been fragile. The prevalence of shuttered shops, disrepair and graffiti, stand as a testament to urban decline and invites anti-social behaviour.

Both Labour and the Conservatives have pledged to tackle anti-social behaviour and to give local authorities the power to take over empty shops. But these measures would be palliative at best and will only address the symptoms of the problem, rather than the cause. While the decline of the high street can be attributed to various issues, the extortionate cost of business rates is at the heart of the problem.

Labour’s plans for the high street are long on generalities and short on specifics. They have certainly recognised the problem – our high streets and town centres are in a state of decline – and have pledged to address it as part of their ‘Plan for Small Business’. Their hope to revitalise the high street by scrapping business rates is bold enough to attract attention, but it does not change the fiscal arithmetic: a Labour government will need to replace the £30 billion that business rates currently brings in to the Treasury.

The Conservative Party promised to reduce business rates in their 2019 manifesto, a promise which has quite clearly not been kept. The best of intentions can fall upon stony ground when faced with a civil service intent on preventing any substantial improvements over the long-term that could threaten the revenue stream in the short-term. This is a hurdle that Labour must clear when they get into Government if they are to oversee a high street resurgence.

Our high streets are failing because the outdated business rates system has made them a difficult place in which to try to run a business. Labour’s plans to scrap business rates will raise a cheer with the many retailers struggling to keep up with ever-increasing costs, but they should be wary of what comes in their wake.

The system of business rates of today is a complicated mess with punitive costs and an unnavigable list of reliefs to prevent disaster in the short-term. But we must remember that a whole new system brings with it the risk of unintended consequences and would inevitably create a cast of new winners and losers. That the reforms of the current Conservative Government have been so minor is in part down to the inability of the Valuation Office Agency – the body responsible for the administration of the tax – to cope with the workload. Labour’s plans for reform must factor in realities like these.

Labour are staunch in their refusal to advocate for uncosted pledges. This is the promise of a party that wants to be seen as a responsible Government in waiting. We therefore all look forward to the detail of Labour’s proposed business rates replacement. Their pledge to scrap them has been met with sighs of relief, but if they are serious about addressing the decline and encouraging thriving high streets and town centres, they will need more than vague proposals to spring our lethargic government bureaucracy to action.

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