Convenience groups have challenged a business rates relief policy, despite experts claiming the policy benefits the independent convenience sector.
A letter by the British Retail Consortium (BRC) to the government called for the future of Transitionary Rate Relief to be questioned in the upcoming Spring Budget.
Many of the 52 companies that signed the letter represent large retail chains including Asda, Morrisons, M&S and Sainsbury’s.
However, organisations partnered with or representing independent convenience stores were also listed, including Spar, the British Independent Retailers Association (BIRA) and the Scottish Grocers Federation.
For businesses that experienced drops in their rateable value after revaluations, transitionary rates relief reduces the amount their rates bills dropped, causing them to pay more.
These extra funds are then used to cap rates rises for businesses that experienced increases in their rateable value.
The BRC described transitional relief as a policy of “winners” and “losers”, with geography playing a major part as to what group a retailer falls into.
Rateable value declines in the south west and north east meant retailers there were hardest hit by transitionary relief, while widespread London increases made the capital the biggest regional beneficiary of the scheme.
BRC chief executive Helen Dickson wrote: “Transitional relief undermines the industry as a whole, and many regions that it serves.”
Arguing for the relief to be “fixed”, the BRC said that the entire retail sector subsidised other industries to the value of £543m over the past three years.
However, Ian Sloan, chartered surveyor at Bankier Sloan, explained that the majority of this burden is paid by chains, especially those with large sites such as department stores. “The retailers who benefit will be small retailers,” he said.
A convenience industry expert agreed that more convenience sites saw rate increases than decreases during the last revaluation, resulting in the policy helping more independent convenience stores than it hinders.
Even for convenience sites with drops in rateable value, the burden of transitional rate relief is lighter because it is graduated to mostly affect businesses with higher rateable values.
Robert Hayton, head of business rates at Altus Group, said: “Convenience stores aren’t typically the ones with a rateable value worth more than £100,000, so even if they did see a large decrease, by April the impact of transitionary relief will have ended.”
BIRA’s chief executive, Andrew Goodacre, said it had assessed “all the relevant pros and cons of removing transitional relief” and called for “wholesale reform” of business rates.
He highlighted BIRA’s successful campaign for 50% rates discounts for smaller shops from this April, but added larger stores “need a different solution to help them in the short term”.
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