The chancellor must freeze the business rates multiplier for all sizes of businesses when he gives his Autumn Statement this week, or the High Street will be put under even greater threat than it is already. That’s the view of John Webber, head of business rates at Colliers.
Currently the business rates multiplier (used to calculate rates bills) is at a high — 51.2p for every £1 of a commercial property’s rateable value, and 49.9p for small businesses.
Given business rates bills rise in line with inflation, based on the CPI figure for the previous September, this year’s September CPI figure of 6.7% means rate bills are likely to soar next April unless action is taken.
Colliers estimates this will put an extra £1.74bn on the rates bill across the board, with the retail sector alone seeing an increase of around £480m in April. The sector will be hit even harder as business rates reliefs are expected to come to an end at the same time.
A similar dire effect will be seen in the hospitality sector, where UKHospitality calculates the sector will see a £234m rates rise in April if no action is taken.
Last year, the chancellor froze the multiplier across the board to help businesses facing bill rises. But in the run-up to this year’s Autumn Statement, he has hinted only about supporting smaller businesses, saying nothing about supporting the bigger retailers or hospitality chains.
This has led to industry fears that while the chancellor might freeze the smaller business rates multiplier, the multiplier for larger businesses will be allowed to rise with inflation.
“This will be a massive hit to the high street,” said John Webber. “Although most businesses in the retail and hospitality sectors have benefited to some extent from the 2023 revaluation, the sectors are still under pressure, facing higher occupational costs across the board as energy, employment, and insurance costs soar.
“The larger retailer and hospitality companies are the main employers in their sectors. Hitting them with a 6.7% rise in their rates bills next April will have a dire impact and certainly dampen expansion and growth plans, and for some businesses might be the last straw.
“The situation is even more bizarre when we see the current inflation figure has already fallen to 4.6% and may be around 3% next April, but we would see such businesses tied to the 6.7% figure for the year.”