Primark owner says larger stores to come under pressure from rates changes
The boss of Primark’s parent firm has warned the Government that proposed business rates changes are “mistaken” and heap pressure on big stores on UK high streets.
George Weston, the billionaire boss of Associated British Foods (ABF), told the PA new agency that the Labour Government “should not increase taxes on businesses any more” in November’s Budget.
It comes as Chancellor Rachel Reeves faces a challenge to increase revenues for the Treasury as it looks to address a potential £40 billion black hole in the state finances.
Previous pledges from the Government to not increase taxes for working people have therefore stoked concerns that the Chancellor could hit businesses again with further tax hikes.
It comes after businesses were hit by increases to national insurance contributions, the national minimum wage and the Extended Producer Responsibility (EPR) packaging tax.
“Increases to labour and packaging have already had an impact and it is important not to make it harder for businesses looking to invest and create jobs,” Mr Weston said.
“My message to Government is that that should not increase taxes on businesses any more.”
Many hospitality, retail and leisure businesses across the UK have also seen the cost of business rates – the tax on commercial properties – increase this year after a previous 75% discount on rates was reduced to 40% in April.
The Government is also introducing a further shake-up to business rates in April next year designed to reduce the rates bills of small high street businesses.
However, Mr Weston said that Primark will face a significantly higher bill as a result, with larger shops and supermarkets having to pay more in order to help cover the cost.
“We are pleased that Government had recognised that there have been problems with the business rates system,” he said.
“But the changes mean there is going to be particular pressure on big stores which are needed to anchor high streets, and I think that was a very mistaken policy.
“We would love to see that reconsidered.”
Primark runs 460 stores globally, with more than 190 of these in the UK.
It came after the British Retail Consortium (BRC) warned on Friday that 400 large-format stores are at risk if they were included in the Government’s new business rates surtax, which affect premises with a rateable value over £500,000.
Experts have said around 363 large shops, excluding supermarkets, are expected to see their rates bills increase in April next year as a result.
Global tax firm Ryan has forecast that an expected surtax would cost these types of shops an extra £45.8 million a year in business rates.
Alex Probyn, practice leader of property tax, at Ryan, said: “This is a stealth tax penalising the very businesses that anchor our high streets and provide mass employment.
“The largest stores are already major contributors to the tax base, and an additional levy will undermine their ability to invest, grow and support local economies.
“It also runs directly contrary to the Government’s policy objective of supporting our high streets and the retail sector.”
By Henry Saker-Clark, PA Deputy Business Editor