More than 17,000 stores in the UK could be closed over the next decade unless the Labor government takes urgent action to overhaul the system, according to warnings from Simon Roberts, CEO of Sainsbury’s, and Paddy Lillis, general secretary of the Union of Shop. of corporate rates reform. Distributive and Allied Workers (Usdaw).
In an article published by The timesRoberts and Lillis highlight that the outdated business rates regime is the main barrier to growth within the retail sector. They highlight the impact of rising business rates, which have risen sharply in recent years, and warn that these financial pressures could lead to tens of thousands of job losses.
“The No. 1 barrier to growth in our sector is the outdated business rates system,” they claim, noting that previous governments have made only minor adjustments to the system without tackling the core problems. The result, they warn, is a steady decline in the number of shops on the high streets, stunted economic growth and widespread job losses.
Research carried out by Development Economics and shared with *The Times* supports these concerns, suggesting that a 20 per cent reduction in general business rates could save retailers £1 billion in the first year alone. This reduction could secure or create more than 17,000 jobs, according to the findings.
While the research acknowledges that such a significant rate cut would initially reduce tax revenues for the Treasury, it predicts that the resulting boost in economic activity would generate a net positive return of £70 million per year for the government within ten years deliver.
However, without intervention, Development Economics warns that in the worst-case scenario, 17,300 stores could close by 2033-2034, with an average of 15 closures per city across England. This could result in the loss of approximately 42,000 jobs.
Roberts and Lillis argue that while business rate reform is not a silver bullet for all economic challenges, it is a crucial first step toward revitalizing growth, boosting jobs and securing sustainable financing for public services .
Business rates, which are calculated based on the rateable value of commercial property, have risen significantly, with the multiplication rate rising from 51.2p to 54.6p. Despite representing just 5 percent of the economy, the retail sector contributes around a fifth of the £32.1 billion in business rates revenue the government expects to collect this year.
In its general election manifesto, the Labor Party pledged to overhaul the business rates system, with the aim of creating a fairer environment between digital and physical retailers. Digital retailers, with their minimal physical footprint, typically experience much lower business rates.
With the Treasury Department under pressure to manage tight public finances, Chancellor Rachel Reeves faces the challenge of balancing spending cuts and potential tax increases. As part of its push for reform, the Treasury has pledged to replace business rates with a fairer system that levels the playing field, stimulates investment, tackles vacant properties and supports entrepreneurship.