The budget announcement will be made today (29 October) and Hammond is expected to cut business rates by 33% for 496,000 small retailers, saving £900m. It is also speculated he will announce a £650m fund to redevelop empty shops and improve transport and infrastructure.
According to the Treasury, a pub in Sheffield with a rateable value (an estimate of the rental cost of the building) of £37,750 will save £6,178 on business rates next year. And a newsagent in Moseley, Birmingham with a rateable value of £14,250 will save £1,749.
Following advice from campaigners, businesses and the industry, it is also expected that the Chancellor will look to relax town planning rules, to support new mixed-use businesses on the high street and the conversion of under-used retail units into offices and homes.
This is expected to be accompanied by support for local leadership to prepare and implement new strategies for their high street, including a new £2m High Streets Taskforce to offer support and advice to help revitalise high streets.
The British Retail Consortium (BRC) said of the plans: “While we hugely welcome the temporary support being given to small businesses, these measures alone are not sufficient to enable a successful reinvention of our high streets. Retailers are currently in the midst of a perfect storm of technology changing how people shop, rising public policy costs and softening demand.
“Struggling high streets require a broader outlook in order to thrive, particularly given the majority of the UK’s 3.1 million retail workers are employed in businesses that will not benefit from this announcement. The underlying issue remains that the business rates burden is simply too high and this unsustainable system needs less tinkering and more wholesale reform within the context of the wider taxation system.”
Robert Hayton, head of UK business rates at real estate advisor Altus Group said “the devil will be in the detail” but the announcement “will almost certainly make trading on the high street more attractive through lower rates and will offer some respite to smaller premises”.
He added: “Larger premises already pay £626m a year extra in rates contributing to the existing small business rates relief scheme through a supplement of 1.3p on the standard tax rate and, unless this commitment is funded by way of a new digital services tax or through central funds, I’m concerned the burden may simply be transferred onto medium and large businesses increasing their rates liabilities even further which would be counterproductive at a time when major retailers are reducing their store portfolios and headcounts.”
Roberto Lobue, partner and retail sector specialist at accountancy firm, Menzies LLP, said: “The chancellor has been toying with the idea of levelling the playing field for bricks and mortar retailers for some time but now he is in a position to do something about it.
“The wave of retail insolvencies and Company Voluntary Arrangements (CVAs) in 2018 indicates that many established businesses are now in survival mode – drastically reducing their property portfolios and cutting jobs, whilst adapting to consumer buying behaviour and increasing their share of online sales.”