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Brighton and Hove traders fear rates more than online shoppers
Business rates are a bigger threat to retail than online shopping, traders have warned.
Helen Dickinson, the director general of the BRC, has summoned 25 chief finance officers and tax experts from the biggest retailers to a summit to determine how to tackle the issue of business rates.
Business rates are charged on all commercial property in the same way that council tax is charged for homes. The rates are calculated through the value and rent of the properties in 2008.
Retailers say rents have collapsed dramatically since 2008 and in some cases they are now paying more in rates than they are in rent. The government has extended its review date from 2013 to 2015. Ministers say this is to provide much-needed stability for businesses.
Claudia Fisher at Purple Heart in North Street, Brighton said online retailers can pass on savings made by not having to pay huge rates bill, beating High Street shops on price.
She said: “The rates force our prices up and make us less competitive and this is where the internet based companies win. The rates for my shop at 19 North Street are pushing £30,000. This bill was a huge factor in deciding to close our temporary shop at 21 North St, where the rates bill was the same.
“It was always a temporary shop and I knew the landlord had other plans for it long term that would never include us but no matter how good a deal the landlord was prepared to do the rates bill was always there and not negotiable.
Two lots of £30,000 is a lot to justify and it means an extraordinarily large number of sales of small items in order just to pay for the space. Retail is struggling and the independents have an onslaught of competition from the big boys in terms of price, high street presence and advertising, not to even mention the competition from the internet.”
Gavin Stewart, boss at the Brighton Business Improvement District, which represents retailers across the city, said: “Businesses are being squeezed from all sides and costs across the board continue to increase.
“Business rates are arguably one of the areas where businesses have least leverage in terms of negotiating a reduction so it’s welcome news that Helen Dickinson has stepped in to support our business community. Savvy businesses will have already realised that to compete in the modern market they need to have embraced ‘Bricks and Clicks’.
“That is to say, if they have a physical store, they need to back it up with an online presence - those without run a very real risk of becoming retail casualties.”
Tony Mernagh, executive director at the Brighton and Hove Economic Partnership, said: “I suspect the reason the BRC has called this meeting is because the Government has delayed the five-year review of business rates which should have happened in 2013.
“Every five years the Inland Revenue look at the rent that people are paying and then base their review of business rates on the new rental levels.
Of course, this normally means that the business rates go up because the rent goes up but, because of the recession, there is a lot of evidence rents have actually declined as small shops go bust and new businesses negotiate a lower rent and large chains use their heft to get substantial discounts from landlords.
“By delaying the review until 2015 there is every chance rents, and hence business rates, will have started to get back to normal i.e. increasing.
Of course, the Government is saying the delay is to help businesses because what they need at the moment is certainty”
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