Ashley calls for business rates reform to save the high street ‘before it becomes too late’
Mike Ashley, Sport Direct chief executive has called on MPs to act quickly to reform business rates.
‘The current business rates regime is clearly helping to kill much of what remains of theUK high street. A large number of retailers including ourselves have been trying to bring this to the Government's attention and finally it looks like it is getting some focus, I really hope it is not too late already and would urge parliamentarians to expedite reform before it really does become too late,’ he says.
‘The current system is unintelligible to almost everyone but true business rates experts, from the transitional relief to revaluation process and effective dates to base liability multipliers.
‘Transitional relief phases and limits increases and decreases in rates liability between rating lists. The rate of transition applying downwards relief for a large store is negligible and results in historic values being applicable for the duration of the rates list. The transitional relief gives preferential treatment to smaller stores (which are those with premises below a£20,000 rateable value outside London and £28,000 within, a very low level).
‘The reality is the downwards phasing severely punishes the larger stores. It is the larger stores that are in desperate trouble and need help as can be seen from the constant tsunami of retail administrations and CVAs. Larger stores bring the footfall to the high streets which benefits all businesses on those high streets. Therefore it would be fairer and more advantageous to all businesses whether directly or indirectly, for there to be a single approach to tapering relief, regardless of a property's size.
‘Under the current rules for transitional phasing, where rents are increasing those locations benefit from upwards transitional phasing and it ends up being better off against its true base liability. This is compared to where locations see falls in rents whereby the downwards transitional phasing means a large store never gets close to its true base liability and this severely punishes these locations which are already suffering.
‘There are other crazy offshoots to the current policy such as property improvements increasing rateable value and thus rates, thus a definite lack of incentive for retailers to invest in their stores if they are penalised for it with the indirect mid and longer-term consequences. I note that there is a clamour in the industry for business rates to be revised much more quickly than the current five years, even as regularly as annually. Whilst this is perfect in theory, our knowledge of the rates process leads us to conclude that it would be exceptionally difficult or impossible for this process to be carried out in these timeframes and would be susceptible to delay, error or manipulation.
‘There are House of Fraser stores paying no rent but still losing money. A correction to the business rates would dramatically change the situation insofar as we could see light at the end of the tunnel and this could help save stores. Just to make it clear, we are not looking for blanket discounts on rates, we are just looking to pay a correct amount, be that at increased or decreased rates.’