Story by Michael Northcott
The chief executive of Tesco, Dave Lewis, has warned that the UK retail sector is facing a “lethal cocktail” of rising costs.
Speaking at the CBI’s annual conference, Lewis said rising business rates and the National Living Wage (introduced by George Osborne earlier this year) mean retailers will face an additional £14bn of costs over the coming five years.
He said business rates are “[the] biggest tax we have and is three times the OECD average”, adding that his firm’s business rates bill has ballooned more than 35 percent in the last five years.
He added: “For every £1 we pay in corporation tax large UK retailers pay £2.31 in rates. It is unsustainable.”
Currently business premises including offices, factories and shops pay the same business rates, which are set by central government. Normally the levy is collected by the local councils, handed back to central government, and then distributed in such a way as to avoid more sparsely commercial areas losing out.
However, under new rules announced by George Osborne, councils will soon be able to keep all of the proceeds of business rates and spend them on whatever budgets they deem appropriate.
Business rates have been controversial for some years, with many pointing to the fact that the levy was last adjusted shortly before the most recent recession, after which profits fell and rates remained at an incommensurate level.