Analysis Shows Midlands and North Most at Risk

Business rates scandal as North and Midlands shoulder highest burden and 'officially need help'

MPs are calling for Business Rates to be slashed to help struggling shops. Proposals have been made for a cut to help protect retailers across the UK.

Such a move offers potential to help create thousands of new retail jobs in worse off areas. It comes as a new study, authored today, reveals that shops in the North of England and the Midlands are being unfairly burdened by hefty business rates liabilities compared to those in the South of the country.  Analysis by the WPI Strategy think tank shows that more than three-quarters (77 per cent) of the constituencies with the highest burden are located in northern areas and the Midlands.

This is compared to just 18 per cent in London and the South.

The disparity stems from the fact that the Business Rates do not mirror economic performance, so for areas that face economic challenges the burden is considerably higher.

32 of 40 constituencies with the highest business rates liabilities are located in areas of the country most in need of “levelling up” such as Sunderland Central, Great Grimsby, Bishop Auckland, and Leigh.

Analysis shows that shops in the top 50 constituencies most burdened by Business Rates have four times the burden of those in the bottom 50.

 

At a constituency level, the difference is even more apparent. A typical supermarket in Bishop Auckland faces a Business Rates burden eight times higher than a supermarket in Surrey Heath. The report states that if the supermarket in Bishop Auckland faced the same burden as one in Surrey Heath, it would pay £820,000 less in rates per year.

In simplified terms Business Rates for retailers come in at more than 50 per cent, with some stores now being hit with 70 per cent charges, according to the report.

It says slashing the level to 40 per cent would “stimulate growth and investment”.

 

The report also shows that a reduction in Business Rates across the retail sector could allow companies to create more than 10,000 jobs in the regions of the country that most need them.

This highlights how the UK now has the highest property taxes in Europe, around 50 per cent more than the next nearest country, and that business rates receipts have increased from £8.8 billion in 1990 to £27.3 billion in 2017-18, an increase of 210 per cent compared with a 75 per cent increase in inflation.

In March, the Chancellor Rishi Sunak announced a 12-month business rates holiday for all retailers and pubs as part of a set of measures designed to support businesses during Covid.

The rates holiday comes to an end in April 2021, and the government is currently consulting on ways to improve the system.

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