Struggling department store chain, Beales, which has a large presence in Bedford town centre, is paying over £1m extra in business rates despite a 2017 revaluation of the tax.
Beales’ 22 regional stores are paying a total of £2.847 million in business rates this year – but according to estimates by John Webber, Head of Business Rates at Colliers international, this is more than they should be.
Business rates are based on a property’s rental value. In 2017, many businesses in Bedford saw their business rates slashed as their properties were re-evaluated as part of a shake-up of rateable values.
Unfortunately, these reductions were phased in over a four-year period, know as transitional relief.
This was reported in the Bedford Clanger in October 2016, with Paul Turner-Mitchell, award-winning independent retailer and business rates campaigner predicting that retailers wouldn’t benefit from the business rates reductions for a number of years.
“The revaluation is long overdue,” said Paul Turner-Mitchell ahead of the 2017 business rates review.
“If these rate reductions were implemented immediately it would be a quick fix for our High Streets. Phasing in could take too long to make the difference to a struggling small business.”
“For many businesses, business rates reductions have been phased in slowly with the result that many struggling companies have perversely been paying more than they should be, whether or not they could afford to,” said John Webster.
In Beales’ case, the company saw a 14% decline in its rateable value in the 2017 Valuation and therefore should have seen a 14% reduction in its rates bill.
In reality it only saw a 3% drop in 2017/8 and in subsequent years
“In a period in which retail has already been struggling due to internet competition and other rising costs, such rates reductions have been pitifully inadequate,” said John Webber. “They have certainly contributed to the business’s current demise.”
Tony Brown the Chief Executive of Beales has called the business rates situation at the company “lunacy” and claims in some stores the rate bill is three or four times the rent bill.
John Webber added, “Of course Beales is not alone. Many other stores who have joined the long list of CVAs and administrations since 2017 have suffered in a similar way.
“A number of Debenhams and House of Fraser stores on the closure lists were there because they were paying artificially high business rates due to phased downwards transition.
“Toys R Us suffered the same fate and was paying many hundreds of pounds worth of business rates bills higher than it should have been. Its decimating our high streets.”
Webber adds, “There is one chink of light at the end of the tunnel. We are about to see a new Revaluation in 2021 and given retail rents have collapsed, business rates falls should in theory follow.
“Of course, the government could put a spanner in the works and again introduce downwards transition as it did in 2017, limiting reductions. But that would be disastrous.”
“One can only hope (and pray) that Mr Johnson and his colleagues have learnt from the deserted high streets of 2020 and the thousands of jobs losses -and provide a fairer playing field for the physical retailers. If he doesn’t, I’m afraid the crisis can only get deeper.”