This week I’ve been giving evidence to the Growth and Infrastructure Bill Committee, in the same room as some of last year’s select committee hearings on phone hacking and the media. I’m pleased to report that I didn’t get attacked with a custard pie – this wasn’t the sort of high-profile hearing that would attract a media scrum – but this legislation matters a great deal to retailers.
One part of the Bill proposes delaying the next rates revaluation by two years. There is a lot of nonsense talked about rates. What matters is who is paying what, and that depends on whether the rental value of your store has gone up or down, more or less than the average (a 13% decline since 2008, according to the Valuation Office) over the previous five years.
So, are you likely to be a winner or a loser from the delay in the revaluation? In short, if your rental value has gone down less than 13%, you should sit tight because you are paying less than you might after a revaluation. If your rental value has gone down by more than the average, you will be paying above the odds for two years longer than you should.
In retail in general, London has performed better than the average, and the North has performed worse. But I think this hides a more important issue. Big centres such as Oxford Street, Westfield and the Bull Ring have held or even grown their rental value, and it’s the neighbourhood areas where values have declined. Given that 64% of convenience stores are in suburban and rural areas, this worries me.
On this basis, I couldn’t give a strong endorsement of the government’s policy to delay the revaluation. There will be winners among our members, but, on balance, I fear that we will lose out.
I told the Committee that if government really wanted to help, it should look at the annual increases in rates we are suffering from. This year it was an eye-watering 5.6%, and next April it is set to be 2.6%, against the government’s own inflation target of 2%. Capping rates increases at this target would bring a meaningful benefit to all rate payers.