Why was one (since closed-down) town centre shop in Suffolk paying 18 times more in equivalent business rates than an out of town supermarket?
- Credit: Archant
As speculation abounds as to the fate of Debenhams, the largest store in Ipswich centre, there are growing concerns that business rates have been set up in a way that is pushing Suffolk’s urban retailers to breaking point.
The owner of Kestrel independent bookshop in Sudbury, Ian Berry, has spent many years researching the topic of business rates in Suffolk through the Valuation Office Agency, and claims that the assessment criteria used to measure rates is “grossly unfair.”
In Sudbury, Mr Berry claims that the rateable values of Sainsburys and Tesco work out at £37 per sq m, compared with Boots on Market Hill which is £105 a sq m.
The front area of the (now closed) Dorothy Perkins clothes shop was £650 sq m - Nearly 18 times more.
“Tesco was also given a 7% rate reduction because Sainsburys opened in competition 2 miles away, but Sudbury town centre (stores) had no reduction,” said Mr Berry. “This is unbelievable. Is it any wonder that retail town shops are disappearing?”
In comparison, the rateable value of the Amazon warehouse premises in Peterborough is under £30 per sq m.
“The unfairness began in 1988 when business rates were reviewed and two systems of assessing the premises were devised - NIA and GIA measurements of assessments,” Mr Berry explained. “The NIA system is used for average town centre type shops and businesses which includes the majority of shops in the UK.
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“However, the GIA system was designed particularly for the out of town warehouses, distribution centres and factories and benefited from a huge financial tax advantage over NIA. The GIA industrial business rate seemed correct at the time and therefore encouraged more employment on the edge of town.
“Huge supermarkets were then being built out of town next to these industrial units, which had this huge financial advantage over the poor town centre traders - together with unlimited free customer car parking.”
Most retail parks that have opened in Suffolk are outside the boundary remit of Ipswich Borough Council, meaning that those Councillors who give them planning permission are not responsible for the impact on Ipswich town centre.
But Paul Clement, the chief executive of Ipswich Central, says that while government can help by easing the costs on high street retailers, it is up to businesses and council leaders to find solutions.
“This is not cyclical or simply due to the internet – it is structural and seismic and, until we appreciate that our town and city centres will never be the same again, we will fail to deal with it,” he said.
Luke Morris, chairman of the Ipswich Suffolk Business Club, claims that the Germans might have the right idea. He says Berlin has a fraction of the UK’s retail parks, virtually zero business rates and no vacant shops. “Imagine what a street of varied and vibrant shops – like the streets of Berlin – would do for our town,” he said. “It would be transformative, and all government needs to do in creating it is less, not more. How bold it would be to throw business rates out and try something else completely particularly for independent retailers and pop-up shops.”