Looking at the Budget, one benefit to retail and leisure and hospitality industries is the business rates reductions.
The key one here is that all retail, leisure and hospitality business with a Rateable Value of less than £51,000 will be exempt from paying rates for the next financial year. This has been extended to nightclubs, small hotels and guesthouses. Further allowances cancelling rates for museums, art galleries, gyms and other key leisure uses for the year has also been agreed including cinemas.
In terms of retail – this is an additional bandage that is needed due to the current scenarios, but it is full scale surgery that is needed to repair retail business rates which has been promised, but not until later this year.
This reassessment of the current system is promised but won’t be until later this year. Business rates still do need this full scale change in any event. Without this a number of business, and certain town centres will struggle and fail.
The additional and extra measures announced giving a business rates discount – are important as footfall on the high street is reduced but people may well be shopping online instead. We need to understand how online business and bricks and mortar business can compete with each other on a tax basis.
With cinemas having films delayed, this will have a knock on effect on the complementary restaurants in a town centre where previously people would have made an afternoon out of it. Is this where takeaway delivery services will see a benefit? This is assuming they have the kitchen staff and delivery drivers to support this.
Supermarkets are currently benefiting from stockpiling, but for how long? People are stockpiling non-perishables so they will not be buying as many later on in the year. Supermarkets are likely to end up suffering because they make most margin on the “luxury” or “treat” items that customers pick up when they visit the store. If customers aren’t visiting, then their t/o will suffer.
However – one warning to take away the “good news story of relief” – the discounts will not benefit many of the “typical” high street retailers who we currently see as struggling as their RVs will be higher than the £51K cut off point for allowances – these are the mainstream fashion names that we are used to seeing and not least the department stores which has also been well documented.
Beth Brading, Associate Director, BNPPRE