The Budget delivered some help for the High Street and this is welcome for many in retail. However, despite some short term relief there was no evidence of looking to reform an archaic business rates system.
The Budget’s main points for the retail sector were:
- £675 million Future High Streets Fund – helping local authority shape the High Street of the future.
- All business properties with a £51,000 rateable value or less will, from April 2019, have a 1/3 reduction on rates until the next revaluation in April 2021, an annual saving of “up to 8,000 for up to 90 percent of all independent shops, pubs, restaurants and cafes.”
- A 2% digital services tax from April 2020 on, for example, online market place providers (which are both profitable and have global revenue in excess of £500 million).
Welcome relief but no reform
The Chancellor acknowledged the High Street was under threat and ultimately fundamentally changing. For those retailers mentioned above, a business rates saving over the next two years will be more than welcome. However, there is no evidence that a total reform of business rates is on the agenda. Many retailers with larger property portfolios will certainly feel left out in the cold by this budget – where was the rates reduction for them?
However, a digital goods tax did not transpire; rather there will be a digital services tax from April 2020 on social media platforms, search engines and perhaps, more pertinently for retail, on line market places.
Change the rates
The Chancellor acknowledged that the High Street has to change to adopt the new ways in which people shop. Furthermore, he wishes to relax change of property use e.g. making it easier to convert from retail to housing. The availability of a £675 million Future High Streets Fund will go toward helping local authorities to make the transition.
Retailers need to be at the top of their game to provide value, product and experience to an ever- demanding consumer in a quickly changing landscape – that is a challenge for the sector. However, the challenge would ease by a complete reform of the business rates system; currently, there is no evidence to show this is on the Chancellor’s radar.