Sir Philip Green, the retail executive, has joined calls for a rates holiday for small retailers in the UK, arguing that rates and rent have fallen out of step since the financial crisis. Matthew Hannah agrees, but says this also brings the north / south divide into sharp focus.
Topshop boss Sir Philip Green was in blistering form when he attacked the government’s decision to delay a rates revaluation until 2017 – meaning that retailers have to wait another four years before their rates will be reviewed.
The former government adviser said that the world had changed since the last review in 2008 – and that action needed to be taken to bring rates down, and save the high street.
Sir Philip joined other major business leaders calling for both a rates freeze and a “rates holiday” for small shop owners. In a strongly worded attack, Sir Philip said the government deliberately inflated rates despite the fact that rents were falling because of the poor state of the economy.
We all know that ‘PG’ is a hugely experienced and successful retailer at the front end of the high street and if he is championing the cause for the smaller retailer and the independent, then I unequivocally agree.
Independent stores add colour and interest to our high streets and it is felt that independents will be the way that our shopping areas will stay alive in years to come. Sir Philip is right – our independents should be given serious consideration and every bit of assistance to stay open.
The greater scandal in my view is that the government’s deferring of the rating revaluation brings an enormous north / south divide.
The current rate system is set on values taken at the 2008 review – which happened before the Lehman Brothers bankruptcy drama so rates were set at the top of the market. When the economy hit crisis in 2009, business rates were set at the previous year’s high levels – so hardly realistic when we were entering a global recession and landlords were then forced to cut rent to keep their units occupied.
Property outside the south east has seen falls in rental values following the onset of the credit crunch in 2007. Conversely, in the north including Nottingham, rents have dropped dramatically.
Furthermore, rateable values as they stand are distorting the market, proving a disincentive to invest in companies in the north, whereas it is incentivising investment by companies in London and the south east, where rates are a smaller proportion of the overall cost of occupation.
All in all, the disparity in rent and rates is widening between north and south and unless the Government acts quickly, high streets above the Watford Gap will struggle even more.
Retail like Boots, Tesco, M&S and John Lewis are backing Philip Green’s views. The problem has also been highlighted by the Bank of England and our industry body the RICS. Alex Gourlay, chief executive of Alliance Boots, has said that rebalancing the cost of doing business in physical shops is a real place for the Government to act. For me, the revaluation issue is an example of poor thought process by the Government – but by taking action now, it can help address the rebalance that Mr Gourlay is talking about.
Sir Philip says that the situation is so serious for smaller shops the Government should consider giving them a rates holiday or allowing small shop owners who pay annual rates of between £20,000 and £50,000 to pay a nominal sum.
I wholeheartedly agree with this and strongly believe that a rates holiday will put the heartbeat back into the high street. We must protect and nurture our smaller independents.
Anything which can maintain – and grow – that sector is a good thing. It is the independents which will take up voids in the high street and that is why Nottingham City Council has set up a growth forum to look at, and address, all aspects of the city centre – including making it easier for start ups to open, and flourish.
Rates holidays or nominal sums for rates bestowed to smaller retailers would encourage our local, Nottinghamshire businesses considering setting up retail units to take the plunge. ‘Clicks to bricks’ is a way of turning the retail problem on its head.
At the moment, small shops are increasingly finding it difficult to trade and if we’re not careful, even more retail units will be lying empty if we don’t put pressure on the government – and allow new life to breathe into our shopping areas.