J Sainsbury PLC (LSE:SBRY) and the Union of Shop, Distributive and Allied Workers (USDAW) have jointly called on the Labour government to “deliver on its promise” to reform business rates, warning that failure to act could result in 17,300 retail store closures over the next decade.
The call follows research conducted by Development Economics highlighting the impact of rising business rates on the retail sector.
Citing the research, Sainsbury’s said the removal of the freeze on the business rates multiplier could cost businesses £1.6 billion in the first year, with more than a quarter of this burden falling on the retail sector.
The business rates multiplier is a factor used to calculate the amount of business rates a company or commercial property owner must pay.
Former chancellor Jeremy Hunt announced in Autumn Budget 2023 that the government would freeze the small business multiplier at 49.9p while uprating the standard multiplier by CPI inflation.
An estimated 4,300 retail jobs could be lost in 2024/25 if the freeze is lifted.
Labour has promised to replace the business rates system “with a new system that will level the playing field between the high street and online giants”.
Sainsbury’s would like Labour to put its money where its mouth is by slashing business rates by 20% in order to boost high-street growth and support job creation.
“All responsible retailers want to pay their fair share of tax, but the current business rates system has become an enormous burden on our industry. It is no longer fit for purpose,” stated Sainsbury’s chief executive Simon Roberts.
“It has failed to keep pace with major changes in how customers are now shopping and how much our retail industry has changed over the last decade.
“As a result, it is directly causing store closures and job losses across the sector.
“We believe there is a better way - one that will contribute to higher economic growth and help our communities to thrive. Today’s report shows that reducing business rates would enable businesses to invest in more stores, creating jobs and generating prosperity.”