The business rates revaluation has been as bad as the financial crash of 2008/2009 for restaurant groups and retailers, according to commercial real estate specialists.
Colliers International has reported that 15 restaurant groups and major retailers have gone into administration or sought a Company Voluntary Agreement (CVA) since April 2017.
John Webber, the company’s head of business rates, 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 four in 2009 – and we are only in April now.”
Announcing that Colliers has estimated some 12,000 jobs have been lost or are on the line, he 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.”
Analysing the business rate increases of those companies to have fallen into financial turmoil Colliers calculated a combined rise of more than £152m.
It estimated that Prezzo saw rates increase from £7.2m to £7.8m, Jamie’s Italian saw its bill rise from £3.5m to £3.6m while Byron saw its business rates grow from £4.9m to £5.3.
Webber said business rate increases are not the only reason retailers, pubs and casual dining restaurants are struggling, but stressed that they had added to an increase in pressure along with wage increases, the apprenticeship levy, inflation and a reduction in the number of people eating out.
He explained: “Some businesses, particularly those in London, saw massive rises in their rates liabilities in 2017, some of which they needed to pay last year, but with the second big uplift coming now in April, in addition to a 3% inflation rise, they are being knocked for six.
“Similarly, retailers and restaurant operators in less affluent areas who should have seen relief from the revaluation are still not benefiting, due to the fact that it takes four years of ‘transition’ before they are allowed to pay their bills at the new revalued level.
“By delaying business rates reaching their true levels, retailers and restaurant operators and pubs in such areas have been forced to pay for the better ones for too long and there is only so long that they can pay at inflated levels.”
Webber has joined voices including UKHospitality and called for a full review of business rates and their impact.
He said: “It is naïve to think the government can afford to reduce the £25 billion 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 10 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. With big bills landing in April the situation is only going to get worse. Reforming the business rates system won’t solve all the retailers’ and restauranteurs’ problems, but at least it would be a start to show support – not another kick in the teeth for struggling businesses.”