A new report has shown that the UK Government’s ‘levelling up’ agenda for the retail sector is being undermined by its current stance on business rates.

The Government’s ‘levelling up fund’ was launched alongside the 2021 Budget, with a £4.8 billion investment in infrastructure such as improvements to the country’s high streets.

Now, a new report from WPI Strategy has claimed that the Government’s business rates or ‘shops tax’ is having a detrimental effect on the recovery of the UK economy.

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The report notes: “The shops tax causes store closures right across England and Wales. It stops investment in new shops. Without business rates reform, more shops will close. Fewer retail jobs will be created, and more retail jobs will be lost.”

These effects will be most acutely felt in the North of England, the Midlands and Wales, the WPI report stated.

The BRC backed up these claims with a recent survey that found that, if the Government’s Fundamental Review does not result in a substantial reduction of the rates burden, four out of five retailers could be forced to close additional stores across the country.

Helen Dickinson, chief executive of the British Retail Consortium, said: “The evidence is clear: business rates are costing shops and jobs and undermining the government’s ‘levelling up’ agenda.

“Retail is the UK’s largest private sector employer and serves as a vital lifeline to places most in need of levelling up, offering flexible jobs, supporting other businesses on the high street, and breathing life into local communities.

“The business rates review is a great opportunity for Government to put the ‘shops tax’ into reverse, and support investment and growth in the regions that need them the most.”

In a post on its website, the BRC recommends the following changes be made to business rates:

  1. The Fundamental Review must result in a long-term substantial reduction of the £8bn annual rates tax burden on retailers and the ending of downwards phasing of transitional relief, which cost retailers over £500m between 2017 and 2020.
  2. Remove the requirement for rates to raise a fixed sum, allowing it to flex in line with economic circumstances as all other taxes do.
  3. Introduce a one-year ‘bridging relief’ of at least 30% for retail for 2022/23 to account for the reduction in retail rents since 2015.