SRC calls for business rates action as inflation bites

THE Scottish Retail Consortium has called for a “shift in mindset” on business rates in response to the most recent high inflation figures published by the ONS.

David Lonsdale, director of the Scottish Retail Consortium, has warned that an increase in non-domestic rates next spring would only pile further pressure on a sector that is already struggling to absorb rising costs.

David Lonsdale, director of the Scottish Retail Consortium.

Lonsdale said that the Scottish Government’s most recent spending review “ominously pointed to a rise in the business rate next spring,” and argued this would be counterproductive in the current economic climate.

He said: “Given the weakness in consumer demand, sluggish footfall, and spiralling cost of doing business, any further hike in Scotland’s business rate – already at a 23-year high – needs to be knocked firmly on the head.

“The only fixed point in a world of flux for retail seems to be rising energy, supply chain and government-imposed costs, which are increasingly difficult to absorb and ultimately add to the pressure on shop prices.

“A shift in mindset is needed on business rates, with a switch from trying to squeeze tax revenues from commercial properties to one which encourages investment into retail destinations.”

Lonsdale’s warning echoed calls from his British Retail Consortium counterparts south of the border. Helen Dickinson, chief executive of the BRC, has warned that retailers “could face a 10% hike in their business rates bill” – a move that would impose a “cost-nightmare of hundreds of millions of pounds on retailers who are already struggling with razor-thin margins.”

While cutting business rates has been a long-term policy position held by both the SRC and BRC, the latest call comes as rising food and drink costs put pressure on household finances.

The most recent Consumer Price Index (CPI) figures from the ONS recorded 12-month inflation to July at 10.1%. Rising food and non-alcoholic drink prices made the largest upward contribution to change in the CPI inflation rate between June and July 2022. There was an overall increase of 2.3% between June and July, taking food and drink’s annual inflation rate to 12.7% in July 2022, up from 9.8% in June. According to ONS data, this is the highest monthly increase since May 2001.

A Scottish Government spokesperson said: “The Scottish Government is delivering the lowest non-domestic property rates in the UK for the fourth year in a row for over 95% of non-domestic properties and offers the UK’s most generous Small Business Bonus Scheme which takes over 111,000 properties out of rates altogether.

“The biggest threat to retail recovery and consumers having income to spend is the current cost emergency and Ministers will continue to press the UK Government to do more to support people and businesses during what are very tough times, exacerbated by the impact of Brexit and the pandemic.”