U.K. Retail Giants Form Alliance To Demand End To ‘Shops Tax’

Some of the U.K.’s biggest and most influential main street retailers have formed a temporary group called the Retail Jobs Alliance in an attempt to force an overhaul of Britain’s outdated business rates.

Grocery giants Tesco, Sainsbury’s and Morrisons are among those to have agreed to back the Alliance in a fresh push to reform the U.K.’s controversial business rates and to demand the introduction of a new online sales tax.

The coalition is urging U.K. Chancellor Rishi Sunak – the most powerful political figure in terms of the purse strings – to rip up Britain’s decades-old business rates regime, which have long been a source of dismay for store-based retailers and main street and shopping center landlords.

They claim that the punitive nature of the business rates does not recognize the pressure physical retailing is operating under and also hands a huge commercial advantage to online players and ecommerce specialists, creating an uneven playing field.

While the call to arms in nothing new, the fact that many of the U.K.’s most powerful retail names and biggest employers have joined forces is a significant new step.

Retail Jobs Alliance Calls For Change

The formation of the Alliance was broken by broadcaster Sky News this morning, which reported that the Retail Jobs Alliance has not only been established but has already written to the Chancellor to demand that he “cuts the shops tax”.

In a letter to Sunak, the new alliance – which also includes the Co-op Group, Kingfisher, Waterstones and food chain Greggs, plus a number of retail trade bodies – said it was writing on behalf of organizations collectively employing more than one million people, equivalent to one-third of the entire industry’s workforce.

It said the Retail Jobs Alliance would be “making the case for an overall cut in business rates for all retail premises, and we are open to the possibility of funding this through the introduction of a new online sales tax (OST)”.

Business rates have been under review and February, the U.K. Government Treasury launched a consultation about introducing an online sales tax in the wake of business rates reform that it claimed would save companies $8.8 billion.

Lucy Frazer, financial secretary to the Treasury, said at the time: “Whilst we’ve made no decision on whether to introduce such a tax, it’s right that, given the growing consumer trend to shop online, we work with stakeholders to assess the appropriate taxation of the retail sector.”

In their letter to Sunak, the retailers said they are “acutely concerned with pressures on household budgets and the rising cost of living”, and asserted that a “meaningful cut in the Shops Tax” would boost retailers’ ability to invest more in stores and create jobs, adding: “This would make it easier for everyone in the retail sector to mitigate inflationary pressures, keep existing shops open and open new ones.”

Business Rates Burden on Small Stores

The group stressed that the burden of business rates weighed most heavily on retailers in areas of the U.K. with the highest number of empty stores, citing research carried out last year, as it pointed out that several of the Retail Jobs Alliance’s members “are businesses with significant online operations as well as physical shops, so would expect to pay any new OST as well as benefiting from a business rates cut”.

Signatories of the letter included Ken Murphy, CEO of Tesco; Sainsbury’s boss Simon Roberts; Thierry Garnier, Kingfisher chief executive; Shirine Khoury-Haq, interim chief executive of the Co-op Group; and Rosin Currie, CEO-designate at Greggs.

WPI Strategy, the political and economics consulting firm, is advising the new coalition, which will be temporary, said it intended to respond to the Treasury’s consultation, which closes this month.