Five leading trade bodies have written to the Chancellor ahead of the Spring Budget, urging him to align the business rates rise in April with the rate of inflation at that point. Currently, April’s rise is linked to the previous September’s CPI (Consumer Price Index), meaning retailers, hospitality and leisure venues, pubs and breweries will be saddled with an inflation-busting 6.7% increase.
The letter, signed by the British Independent Retailers Association (Bira), British Retail Consortium (BRC), Association of Convenience Stores, British Beer and Pub Association and UK Hospitality, urges the Chancellor to instead use the Bank of England’s Q2 forecast for inflation – currently 2.0%:
The letter states: ‘April’s rates rise should be based on April 2024 CPI, rather than the level from seven months prior, when global cost pressures were still keeping inflation high. This would keep our business rates contributions in line with current changing prices, rather than introducing an inflationary rise. It would support our industries as they seek to drive greater investment in villages, towns and cities all over the country.’
BRC Chief Executive Helen Dickinson OBE said: “April’s rates rise will be more than three times the expected inflation at that time. This means above-inflation cost increases for businesses, which will put significant upwards pressure on prices, jeopardising the current success in bringing down inflation. The Government needs to fix this anomaly and make sure April inflation is the determinant of April’s rates rise.
“With retail on the line for an additional £400m in rates, it is inevitable that there will be renewed pressure on retail prices, as well as blocking much new investment in our town and city centres. It is essential that the Chancellor uses the Spring Budget to make this change and give our local communities a fighting chance to thrive.”
Bira CEO Andrew Goodacre commented: “The retail sector, especially the non-food sectors, are very fragile with weak sales and rising costs. The last thing we need in April is an increase in business rates higher than the current rate of inflation for those retailers who do not qualify for the retail discount.”