Labour facing calls to hit Amazon with tax hike to save high street from 'bombshell' next year
Chancellor Rachel Reeves used this week’s Labour Conference to repeat the party’s pledge to overhaul the property tax - and Labour's manifesto promised to “level the playing field between the high street and online giants”
by Graham Hiscott · The MirrorThe Government was urged to hit Amazon with an immediate tax hike to save high street firms from a “bombshell” next year. An industry body called for swift change to business rates amid fears thousands of shops, pubs and others at the heart of communities will be forced to close.
Chancellor Rachel Reeves used this week’s Labour Conference to repeat the party’s pledge to overhaul the property tax. Its manifesto promised a new system to “level the playing field between the high street and online giants”. However, business leaders fear many smaller firms could go to the wall before the shake-up happens.
Owners of more than 250,000 high street premises are being helped through 75% off their rates bills. But the scheme is currently due to expire next March. Industry experts Altus Group estimates withdrawing the relief, and an annual rise in business rates, will lead to retail, leisure and hospitality firms facing a £2.7billion tax blow next year.
Trade body UKHospitality says not extending rates relief could leave up to 20,000 firms in its sector - employing 400,000 people - reeling, with many at risk of closure. Kate Nicholls, its chief executive, said firms faced a “devastating cliff-edge next April, when many will see their bills quadruple. The scale of this...tax bombshell is just not viable.”
Recent figures revealed more than 50 pubs a month on average were lost in England and Wales during the first half of 2024.
UKHospitality wants the government to keep rates lower for the sector as a “bridge” until reform of the system. The British Retail Consortium, meanwhile, is calling for a permanent 20% rates discount for all shops. However, lower rates from pubs, shops and the like would need more having to come from elsewhere as Labour says any reforms must “raise the same revenue but in a fairer way.” It comes as Ms Reeves warned next month’s Budget would include “tough decisions” after the Tories left Labour with a £22billion black hole in the nation’s finances.
UKHospitality argues online giants should be among those forced to pay higher rates straight away to help fund ongoing help for those in its sector, many of whom are still battling to survive. "For 80% to 90% of the economy, business rates are not an issue,” Ms Nicholls claimed. “But for the remaining 20% - high streets, hospitality, leisure, - it is acute. Our message to the government is, take your time to get it right in terms of root and branch reform, but put in a place a bridge that provides a reduction for those high street businesses for between now and then. It could be offset by increases in the standard and a higher rate for online premises. f the Treasury wanted to, it could introduce that as an immediate change at this Budget.”
Altus Group estimates Amazon is liable for around £130million in business rates on more than 100 sites, from fulfilment centres to offices. It came as Amazon yesterday revealed it raked in £27billion on revenues in the UK last year. Altus estimates that rates account for around 2.6% of the turnover for retailers with physical stores, compared to just 0.45% for large online rivals.
Helen Dickinson, chief executive of the British Retail Consortium, said: “A thriving high street is the backbone of many local communities, providing shops, jobs and investment to every corner of the economy. The current business rates system puts this at risk, leaving gap toothed high streets in its wake and acting as a brake on investment.”
Figures from the Centre for Retail Research show nearly 55,000 jobs in the sector have already gone this year, with 5,000 stores closed.
However, the BRC’s suggested rates “corrector” could raise eyebrows as it would benefit chain stores, as well as small shops.
Alex Probyn, president of property tax at Altus Group, said: “Despite the £22billion ‘black hole’ in the nation’s public finances, the Chancellor must now prevent a cliff edge for the retail, hospitality and leisure sectors at her Budget whilst also delivering upon Labour’s manifesto commitment to lower the undue burden already placed on our high streets.”
Tom McNeeney, of Rochdale pub The Oxford
“The pub sector is on a knife edge as it is,” he said. "A big increase in rates next year and for some pubs they’d be better off just walking away. We need the rate reduction to stay, not just for next year but until we get a proper look at the whole rates system.” Mr McNeeney said any increase in rates would likely coincide with another rise in the minimum wage.
Surinder Josan, 59, who runs family-run All Seasons DIY in Smethwick, West Midlands
After getting outside help, the business was able to reduce its rates bill to zero for now. However, it could end up paying potentially £7,000 a year or more if the rates relief ends. “It has made such a big difference,” said Mr Josan, whose parents started the shop around 50 years ago. “It has meant we have not had to worry about it. We would struggle if rates went up..
Mr Josan predicted some shops would close if rates relief was scrapped, while others may be forced ditch improved or expansion. It comes amid pressures from other costs. “In our case it is energy bills that have really hit us,” Mr Josan said. “Also, the cost of what we are buying has gone up, and so has the selling price. But people’s disposable incomes have been eroded and there is a huge increase in theft, people are coming in and nicking stuff.”
Tim Hassell, who runs the Thurlestone Hotel in Devon, says he would have to find £110,000 if relief ended in April
“In a year when we have seen a drop in demand and extra costs on almost everything, we have seen profits drop to break-even point. A huge rise in our business rates bill would have a massive impact, particularly on our investment plans. The current business rates system unfairly penalises property-based businesses like ours. It’s in dire need of reform.”
Roxane Marjoram, who co-owns several pubs in and around Suffolk with husband David, said the potential quadrupling of rates bills fills her “with dread”