Sainsbury’s and the Union of Shop, Distributive and Allied Workers (Usdaw) have warned that the UK retail sector is facing a crisis, with thousands of job losses and store closures imminent unless the government takes urgent action to reform business rates.
A report commissioned by the two organisations has found that the current business rates system is unsustainable and that planned increases to the tax will accelerate the decline of the high street.
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The research, conducted by Development Economics, predicts that 17,300 retail stores could close over the next decade.
The report also highlights the negative impact on the public purse, with an estimated £5.5bn ($7.0bn) in lost tax revenue over the next ten years.
However, it proposes a solution: a 20% cut in retail business rates.
Contrary to expectations, the report argues that this would increase government revenue by £70m per annum due to increased economic activity and investment.
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By GlobalDataIn addition, the report states that a 20% cut could also protect and create more than 17,000 retail jobs.
“All responsible retailers want to pay their fair share of tax, but the current business rates system has become an enormous burden on our industry. It is no longer fit for purpose,” said Simon Roberts, CEO of Sainsbury’s.
“It has failed to keep pace with major changes in how customers are now shopping and how much our retail industry has changed over the last decade. As a result, it is directly causing store closures and job losses across the sector.
“We need a coordinated and inclusive approach, involving all key stakeholders,” emphasised Paddy Lillis, general secretary of Usdaw.
“The current business rates system is not fit for purpose, as it places bricks-and-mortar retailers at a significant disadvantage to online retail. In effect, this amounts to nothing more than an unfair tax on shops and action has to be taken to level the playing field.
Both Sainsbury’s and Usdaw have urged the government to act swiftly to prevent further damage to the retail sector.
