Budget: relief for smaller retailers, but system remains 'arbitrary and unfair'

News - Bookselling Tuesday, 30 October 2018

BA welcomes chancellor's measures, while urging further reform


The chancellor of the exchequer, Philip Hammond (right), announced in his Budget yesterday that business rates for companies with rateable values of £51,000 would be cut by a third over two years. It is estimated that the measure will benefit 90% of independent retailers, cutting bills by up to £8,000. Hammond also made a gesture towards making making high street retailers' competition against online sellers less unfair, imposing a digital services tax on tech giants such as Amazon.

Hammond promised £675m in co-funding to support councils in transforming high streets, saying that "if Britain's high streets are to remain at the centre of our community life they will need to adapt".

Labour leader Jeremy Corbyn was scornful of the relief proposal, arguing that it "only unpicks his own disastrous [rates] revaluation last year".

BBC business editor Simon Jack pointed out that rateable values on prominent high street sites were usually a lot higher than the £51,000 threshold. He quoted British Retail Consortium ceo Helen Dickinson as saying: "Rather than tinkering around the edges, struggling high streets require wholesale reform of business rates in order to thrive. The issue remains that the business rates burden is simply too high."

Jack added that the digital services tax might never come into operation, because it would be superseded by measures adopted by the OECD countries.

Quoted in the Times, boohoo.com chairman Peter Williams was sceptical of measures to help small retailers: "Temporarily propping up uneconomic retail enterprises distracts from the immediate need, which is to transform unused retail spaces into mixed-use environments including leisure, art installations, public realm and housing," he said.

Tim Godfray, executive chairman of the Booksellers Association (BA), welcomed the business rates relief - a measure that followed a lobbying campaign featuring "literally thousands" of letters to government figures. "We are grateful to all of our members who made their own representations to their MP/MSP/AM/MLA, and also to Baroness Rebuck and Lord Bird in particular, who lobbied extensively in the House of Lords to secure an improvement for booksellers."

BA md Meryl Halls (left) added that the association hoped that parliaments in Scotland and Wales would introduce similar measures. But she noted that larger shops would continue to be "hammered by this iniquitous business rates system... Those bookshops over the £51,000 threshold will consider it arbitrary and unfair to be cut off from assistance."

Commenting on the proposed tax on the tech giants, Halls said: "It is good to see the chancellor showing support for the high street by imposing a new digital services tax on the very big technology companies that have a competitive fiscal advantage over physical businesses when paying business rates. Amazon has massively distorted our market place, so we will need to read the small print carefully to ascertain how far the playing field might be made more level by this development."

Giles Clifton, BA head of corporate affairs, said: "As we understand the [digital sales tax] proposal, the new Digital Services Tax will apply to UK revenues of the big technology companies that have global sales of more than £500m. It is not an online sales tax. The government hopes to raise some £400m from this measure. We will have to see how our main competitor, Amazon, is affected by this proposal... What is frustrating to us is that this new digital services tax will not kick in until April 2020, giving the tech companies a further period of competitive fiscal advantage."

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