Sainsbury's CEO Calls for Reform of Outdated Business Rates System
In a bold statement, Simon Roberts, the Chief Executive of Sainsbury's, has declared that the current business rates system is "no longer fit for purpose." Roberts' comments highlight the growing burden that traditional retailers face in the face of increasing competition from online competitors.
The Disproportionate Impact on Retailers
Sainsbury's, one of the UK's largest supermarket chains, spends nearly £500 million annually on business rates, making it the company's largest tax bill. Roberts argues that this disproportionately impacts the retail sector, which is "over-taxed" compared to online businesses like Amazon that are able to "bear the burden."
The CEO's concerns are echoed by other major retailers, including M&S and Currys. M&S boss Stuart Machin warns that any increase in business rates would "threaten to divert millions of pounds away from ongoing investment in keeping prices down and creating jobs across the country." Similarly, Currys chief executive Alex Baldock believes that the current system allows Amazon "a free ride" while British retailers face the brunt of the tax burden.
The Need for Reform
Roberts emphasises that "all responsible retailers want to pay their fair share of tax," but the current system is fundamentally flawed. In 2017, Sainsbury's former CEO Mike Coupe called for a "fundamental reform" of business rates, stating that changes to the levy would benefit online firms such as Amazon.
The British Retail Consortium has reported that the planned 6.7% increase in the metric used to calculate property tax bills, set to be announced by Chancellor Jeremy Hunt at the Autumn Statement on November 22, will translate to a £470 million hike for the industry. This comes at a time when the government is looking to tackle inflation and consumers are still struggling with the cost of living.
The Impact on Food Prices and Jobs
Roberts warns that if the government fails to address the issue of business rates, it could interrupt the downward trend in food inflation. He emphasises that there is a "clear risk" that any increase in rates will bring further pressure on food prices, ultimately impacting consumers.
Moreover, the CEO believes that the current system threatens job creation and investment in the retail sector. He argues that the government should prioritise measures that boost jobs, growth, and revenue, rather than maintaining an outdated tax structure that disadvantages traditional retailers.
Calls for Action
In September, 44 business leaders, including those from Aldi, Boots, Ikea, M&S, Sainsbury's, and Tesco, signed an open letter calling for a freeze in business rates. This collective action highlights the widespread concern within the industry about the detrimental effects of the current system.
Roberts urges the government to keep its promises regarding business rates and to prioritise reforms that level the playing field for traditional retailers. He believes that such measures would not only benefit the retail sector but also contribute to the overall economic growth and well-being of the country.
The comments made by Sainsbury's CEO Simon Roberts underscore the pressing need for reform in the UK's business rates system. As online shopping continues to grow, traditional retailers are facing an increasingly uneven playing field, with the burden of business rates disproportionately impacting their profitability and ability to invest in jobs and growth.
Roberts' call for action is echoed by other industry leaders, who recognise the potential consequences of inaction. By reforming the business rates system, the government has an opportunity to support the retail sector, keep prices down for consumers, and foster a more vibrant and competitive economy. As the Autumn Statement approaches, all eyes will be on the Chancellor to see if he heeds the industry's demands for change.
Jake Robson, editor.