The Chancellor is under pressure to take immediate action to reform business rates as retailers brace themselves for a 3.2% rate rise in April 2014.
The Office of National Statistics today announced that the Retail Price Index (RPI) for September rose 3.2%, which is the figure used to set next year’s rates increase.
The rate remains higher than the government’s target of 2% and is an increase on last year’s 2.6% hike.
The Association of Convenience Stores estimates that next year’s rates rise will cost convenience retailers £25.8m, while the British Retail Consortium believes it will cost the overall retail sector £242m.
ACS chief executive called on Chancellor George Osborne to undertake a “root and branch reform” of the rates system.
“Continuing unpredictable increases in business rates have put unnecessary pressure on businesses and stifled investment at a time when growth is desperately needed,” he said.
“The Chancellor must not ignore the collective voice of thousands of businesses calling out for change. We need a new system for setting the rates increase and a cap on increases that provides retailers with certainty when planning for the future.”
BRC director general Helen Dickinson said: “Across the country today, retailers are adding up what this increase in the RPI will mean for the cost of their business rates next year. Many will be wondering whether they will be able to stay open.
“New analysis by the BRC shows that because of this increase, retailers are going to be paying £3.44 in business rates for every £1 they pay in corporation tax in 2014. That’s a rise from £2.48 in 2005 and demonstrates just how radically our tax system has changed and how hard our high streets are being hit.”
Labour leader Ed Miliband has pledged to freeze business rates if elected in 2015.