Chancellor has rates and high street in range but experts argue his aim remains wide of the mark

StartFragmentToday's Budget has unveiled plans to tackle the UK's high street woes with moves to help smaller businesses. CoStar News catches up with industry experts for their reactions.EndFragment

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The Chancellor has today revealed an £1.5bn injection for the struggling UK High Street today including £900m in business rates relief for nearly 500,000 small businesses and £675m to rejuvenate high streets and their transport links in a heavily trailed move. The industry is already reacting, describing the move as both welcome and nowhere near enough.

Drilling into the details the Budget will reportedly include extensions to small business rate relief to include stores with a rateable value of up to £51,000 something that would translate to £900m of immediate rates relief for 496,000 small retailers.

The Chancellor said the move would mean an annual saving of "up to £8,000 for up to 90% of all independent shops, pubs, restaurants and cafes".

Hammond also announced £675m of co-funding to create a "Future High Streets Fund" to support councils to draw up plans to rejuvenate High Streets.

Hammond said this would allow them to invest in the improvements they need and to facilitate redevelopment of under-used retail and commercial areas into residential.

In a tour de force of punning too the Chancellor has announced a mandatory business rates relief for public toilets so that local authorities can "relieve themselves".

"For the convenience of the House, Mr Deputy Speaker, and without wishing to get unduly bogged down in this subject this relief will extend to any such facilities made available for public use, whether publicly or privately owned. This is virtually the only announcement in this Budget that hasn’t leaked."

ACS (the Association of Convenience Stores) chief executive James Lowman has described the move as a “huge boost to small shop owners across the country” showing that the Chancellor has listened to [their] concerns and “taken decisive action to reduce the burden of business rates following big increases in recent years”.

“We hope that the Chancellor will include in this policy retailers with a number of stores who cannot currently benefit from this rate relief. We also need to continue the debate on how the business rates system can promote investment in stores so they can compete in a rapidly changing retail environment,” he added.

Hannah Essex, Co-Executive Director of Policy and Campaigns, at the British Chambers of Commerce (BCC), also lauded the move: “An alarming number of high street firms, both large and small, are closing or being earmarked for closure. This deterioration has cost thousands of jobs since the start of 2018. While there are long-term structural changes taking place, including changes to consumer habits, the tipping point for many of these firms has been the unnecessarily large burden that business rates place on them. Therefore, this short-term reduction in rates will be very welcome news to those on the high street who require urgent respite.

“Business rates are a heavy burden that throttle all firms with steep bills regardless of how well they’re doing or the economy is faring. We have also called on the Chancellor to ensure that all businesses have a 12 month delay on increased business rate bills when improving an existing property or moving to a new premises. In the long term we will continue to call for fundamental reform of the broken business rates system.”

Robert Hayton, Head of UK Business Rates at real estate advisor Altus Group was less optimistic about its likely benefits saying that “the devil will be in the detail”.

He added that the announcement will “almost certainly make trading on the high street more attractive through lower rates and will offer some respite to smaller premises” but urged caution about how it would be funded.

He explained: “Larger premises already pay £626m a year extra in rates contributing to the existing small business rates relief scheme through a supplement of 1.3p on the standard tax rate and, unless this commitment is funded by way of a new digital services tax or through central funds, I’m concerned the burden may simply be transferred onto medium and large businesses increasing their rates liabilities even further which would be counterproductive at a time when major retailers are reducing their store portfolios and headcounts.”

Colliers International said the move entirely missed the point and represented in fact a “total lack of support to major retailers as the bloodbath continues on the high street”.

John Webber, Head of Business Rates at Colliers International, said the Chancellor is aiming at the “wrong target if he wants to stem the massive loss of jobs in the retail sector, which have come mainly from the big struggling store chains”.

Webber highlighted research that shows that plans announced last week to close 50 Debenhams shops coupled with Gourmet Burger Kitchen’s plans to axe 17 restaurants brings the total amount of UK retail space lost in 2018 to 20.3m sq ft, across 1500 stores and effecting 38,000 jobs, the worst figures for a decade.

Webber said the Chancellor’s measures by aiming to help those businesses with a rateable value of up to £51,000, give no concessions to those that have an RV that is higher “where the pain is at the moment”.

“It beggars belief that whilst businesses are set to face a £600m business rates bill rise in 2019, £200m of which will be paid by the retail sector, the Chancellor thinks it’s enough to purely offer a giveaway to businesses who in most cases already receive small business relief and to do nothing to help the big retail employers. The high street will still be hamstrung by ineffective measures.”

Webber added that what is striking is “none of the stores” hit by CVAs this year “would have benefited from what the Chancellor is proposing".

Simon Brooks, co-head of origination at Investec Structured Property Finance, described the move as a “small but welcome step, especially in light of the Debenhams store closures announced last week”.

He added: “Anything the government can do to demonstrate that they are supportive of reinvigorating the physical retail sector in the UK and the huge number of jobs it supports should be applauded and this £1.5bn package sends out a positive message.”

Savills welcomed the Chancellor's twin approach to retail.

Paul Clement, head of place shaping at Savills, said: “We are very pleased that the chancellor has recognised the need to extend an essential lifeline to the British high street. Business rate relief alongside a new fund for local authorities to redevelop and transform town centres are just some of the key recommendations made by Savills as part of the evidence submitted to the Housing Communities and Local Government Committee’s (HCLGC) latest Government inquiry. Creating places where people want, rather than need to be, can only be achieved through this kind of systemic change.

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The Chancellor has today revealed an £1.5bn injection for the struggling UK High Street today including £900m in business rates relief for nearly 500,000 small businesses and £675m to rejuvenate high streets and their transport links in a heavily trailed move. The industry is already reacting, describing the move as both welcome and nowhere near enough.

Drilling into the details the Budget will reportedly include extensions to small business rate relief to include stores with a rateable value of up to £51,000 something that would translate to £900m of immediate rates relief for 496,000 small retailers.

The Chancellor said the move would mean an annual saving of "up to £8,000 for up to 90% of all independent shops, pubs, restaurants and cafes".

Hammond also announced £675m of co-funding to create a "Future High Streets Fund" to support councils to draw up plans to rejuvenate High Streets.

Hammond said this would allow them to invest in the improvements they need and to facilitate redevelopment of under-used retail and commercial areas into residential.

In a tour de force of punning too the Chancellor has announced a mandatory business rates relief for public toilets so that local authorities can "relieve themselves".

"For the convenience of the House, Mr Deputy Speaker, and without wishing to get unduly bogged down in this subject this relief will extend to any such facilities made available for public use, whether publicly or privately owned. This is virtually the only announcement in this Budget that hasn’t leaked."

ACS (the Association of Convenience Stores) chief executive James Lowman has described the move as a “huge boost to small shop owners across the country” showing that the Chancellor has listened to [their] concerns and “taken decisive action to reduce the burden of business rates following big increases in recent years”.

“We hope that the Chancellor will include in this policy retailers with a number of stores who cannot currently benefit from this rate relief. We also need to continue the debate on how the business rates system can promote investment in stores so they can compete in a rapidly changing retail environment,” he added.

Hannah Essex, Co-Executive Director of Policy and Campaigns, at the British Chambers of Commerce (BCC), also lauded the move: “An alarming number of high street firms, both large and small, are closing or being earmarked for closure. This deterioration has cost thousands of jobs since the start of 2018. While there are long-term structural changes taking place, including changes to consumer habits, the tipping point for many of these firms has been the unnecessarily large burden that business rates place on them. Therefore, this short-term reduction in rates will be very welcome news to those on the high street who require urgent respite.

“Business rates are a heavy burden that throttle all firms with steep bills regardless of how well they’re doing or the economy is faring. We have also called on the Chancellor to ensure that all businesses have a 12 month delay on increased business rate bills when improving an existing property or moving to a new premises. In the long term we will continue to call for fundamental reform of the broken business rates system.”

Robert Hayton, Head of UK Business Rates at real estate advisor Altus Group was less optimistic about its likely benefits saying that “the devil will be in the detail”.

He added that the announcement will “almost certainly make trading on the high street more attractive through lower rates and will offer some respite to smaller premises” but urged caution about how it would be funded.

He explained: “Larger premises already pay £626m a year extra in rates contributing to the existing small business rates relief scheme through a supplement of 1.3p on the standard tax rate and, unless this commitment is funded by way of a new digital services tax or through central funds, I’m concerned the burden may simply be transferred onto medium and large businesses increasing their rates liabilities even further which would be counterproductive at a time when major retailers are reducing their store portfolios and headcounts.”

Colliers International said the move entirely missed the point and represented in fact a “total lack of support to major retailers as the bloodbath continues on the high street”.

John Webber, Head of Business Rates at Colliers International, said the Chancellor is aiming at the “wrong target if he wants to stem the massive loss of jobs in the retail sector, which have come mainly from the big struggling store chains”.

Webber highlighted research that shows that plans announced last week to close 50 Debenhams shops coupled with Gourmet Burger Kitchen’s plans to axe 17 restaurants brings the total amount of UK retail space lost in 2018 to 20.3m sq ft, across 1500 stores and effecting 38,000 jobs, the worst figures for a decade.

Webber said the Chancellor’s measures by aiming to help those businesses with a rateable value of up to £51,000, give no concessions to those that have an RV that is higher “where the pain is at the moment”.

“It beggars belief that whilst businesses are set to face a £600m business rates bill rise in 2019, £200m of which will be paid by the retail sector, the Chancellor thinks it’s enough to purely offer a giveaway to businesses who in most cases already receive small business relief and to do nothing to help the big retail employers. The high street will still be hamstrung by ineffective measures.”

Webber added that what is striking is “none of the stores” hit by CVAs this year “would have benefited from what the Chancellor is proposing".

Simon Brooks, co-head of origination at Investec Structured Property Finance, described the move as a “small but welcome step, especially in light of the Debenhams store closures announced last week”.

He added: “Anything the government can do to demonstrate that they are supportive of reinvigorating the physical retail sector in the UK and the huge number of jobs it supports should be applauded and this £1.5bn package sends out a positive message.”

Savills welcomed the Chancellor's twin approach to retail.

Paul Clement, head of place shaping at Savills, said: “We are very pleased that the chancellor has recognised the need to extend an essential lifeline to the British high street. Business rate relief alongside a new fund for local authorities to redevelop and transform town centres are just some of the key recommendations made by Savills as part of the evidence submitted to the Housing Communities and Local Government Committee’s (HCLGC) latest Government inquiry. Creating places where people want, rather than need to be, can only be achieved through this kind of systemic change.”

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