Fifteen major retailers or restaurant groups have gone into CVA or administration in the twelve months since the April 2017 Business Rates Revaluation, according to Colliers International, the global commercial real estate agency and consultancy.
Ten of those have happened since the beginning of this year – in the last three and a half months alone.
John Webber, head of business rates at Colliers, said: “These figures are as bad, if not worse than the crash of 2008/9 when 16 companies went into administration – 12 in 2008 and 4 in 2009 – and we are only in April now.”
Colliers has calculated that already around 12,000 jobs have been lost or are on the line. Webber added: “We wonder how many more retailers are going to get into trouble or people lose their jobs before someone decides to tackle the problem properly.”
Colliers has calculated the rating bills of each of the household names that have gone into administration or announced CVAs since the 2017 Revaluation and the types of bills they are either facing or would be facing in 2018/9 if still trading.
The figures show that together they saw a rates bill of over £152m last year and would be hit with an even higher bill this year.
The table below includes Conviviality’s Bargain Booze and Wine Rack stores, which were part of its retail chain which was bought in a pre-pack administration and Carpetright, which on Thursday announced it was closing 92 stores and axing 300 jobs.
Closed/Looking to Close
Bill (m) 2017/8
|2017||Feather & Black||20||£0.55||£0.58|
|2017||Handmade Burger Co||9||£1.3||£1.4|
|2018||Toys R Us||105||£21.9||£21.9|
|2018||Bargain Booze + Wine Rack||+||£3.26||£3.42|
|TOTAL TO DATE||£152 m||£154m|
+ Not yet announced how many stores will be closed/jobs lost
Because of this, Webber feels the Chancellor missed a trick in his Spring Budget by failing to tackle the issue of business rate reform.
Webber points out that business rates cost is not the only reason retailers, pubs and now casual dining restaurants are struggling. Higher costs in terms of wages caused by the NMLW and apprenticeship levy, together with increased costs of materials due to inflation have combined at a time when due to economic uncertainty less people are going out and buying in shops or eating in restaurants.
Some retailers have structural issues with high amounts of private equity demanding unattainable returns and online shopping has made the investment and cost of running bricks and mortar premises costly.
Webber has called for a proper business rates review as seen in Scotland undertaken by Ken Barclay last year, looking at the multiplier and the whole system of reliefs and who funds the system.
Webber said: “It is naïve to think the government can afford to reduce the £25bn pot it receives from the business rates levy, but it is in everyone’s interests that we properly reform the system so that every business pays something for the services it receives from the local community and the rates burden is not purely on a few that increasingly can’t afford it. And it also is essential that businesses have a true and fit for purpose appeal system, if they believe they have been assessed unfairly.”
“The fact that ten sizeable retailers or restaurant groups have gone into administration or CVA since the beginning of the year is extremely worrying. Our figures do not even include all the small independent stores that have gone to the wall too.”