Retail giants including M&S and Tesco warn Burnham’s business rates raid could drive up cost of living

Retailers including Marks & Spencer and Tesco have warned Andy Burnham that a business rates raid could drive up the cost of living, as well as hitting jobs and investment at large stores.

Some of Britain’s biggest chains have united to warn the new Prime Minister against piling higher taxes on their shops in order to pay for lower bills for other businesses such as pubs.

Shops should not have to pay more, according to Marks & Spencer, Tesco, Sainsbury’s, B&Q-owner Kingfisher, Morrisons, Primark and Asda.

The letter was also signed by Usdaw, the Union of Shop, Distributive and Allied Workers, which has around 370,000 members.

In a letter sent by the Retail Jobs Alliance, big firms have said future changes ‘should support continued investment by bricks-and-mortar retailers across the country.’

It said high street retailers had to grapple with a total of £7bn in extra costs and taxes last year, including business rates, packaging levies and higher wages.

The coalition warned that these factors were a ‘direct cost driver on prices’ and said increasing them further would drive up the cost of goods for customers. 

‘Further increases would place even greater pressure on retailers’ ability to support customers through competitive pricing and cost of living initiatives,’ the letter said. 

‘Retail stores are integral to [the] high street renaissance but they cannot continue investing in communities if they face an ever-increasing tax burden.’

It comes as the Prime Minister and Chancellor, John Healey prepare their first Budget for 28 October.  

The letter went on to say that businesses including pubs and restaurants ‘all rely on vibrant town centres with strong footfall and consumer spending,’ which big shops help to create.

By cutting rates for hospitality and increasing costs for retail, the High Street ‘ecosystem’ is at risk and the wider benefits of helping venues ‘will inevitably be reduced,’ it added.

Business rates are paid on the rateable value of a commercial property, based on its estimated rental value, as well as ‘multiplier’ rates based on property size.

Labour has already announced it will give pubs and music venues a 20 per cent discount off their rates bills from next spring, as well as ordering a consultation into the way pub and hotel business rates bills are calculated.

It promised in its manifesto to ‘level the playing field between the High Street and online giants’.

There are concerns ahead of the Budget that premises with rateable values of above £500,000 will have to pay more from next spring.

A higher ‘multipler’ was introduced last year for this band of properties, which includes big department stores and supermarkets as well as online warehouses.

The retailers have now asked to exempt all bricks-and-mortar retail stores from the higher multiplier.

This summer’s record heatwaves have created fresh concerns over food prices over the next few months while retailers and food producers are also experiencing increases to their energy bills.

Higher rates would also ‘severely impact investment, employment and the viability of these anchor stores across the country.’

The latest worrying youth unemployment figures last week revealed that 981,000 people aged 16 to 24 were not ‘earning or learning’ between April and June.

Exempting shops would ‘support your commitment to growth in every postcode by safeguarding retail employment across the country, the foundation that makes vibrant high streets and communities possible,’ the letter concluded.