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Frasers Group boss Michael Murray has criticised the UK business rates system, arguing that higher bills following store upgrades are discouraging investment in town centres.
The retail group spends tens of millions of pounds on upgrading its store estate, but those projects can push up property rateable values and the resulting tax bills, Murray said in an interview with The Telegraph at the opening of a new Sports Direct flagship in Dublin.
Murray described the current business rate system, which he said penalised retailers for upgrading their shops, as making “zero sense”. He added that rising operating costs were making it harder to run high street stores profitably.
Demands to scrap property tax to support cut in business rates
Murray’s remarks come amid wider demands to scrap the property tax. The Real Rates Reform Alliance, which says it speaks for more than 28,000 firms and business leaders, has suggested a 2% levy on online sales to pay for a 37% cut in business rates for bricks-and-mortar companies.
Research cited by the alliance found that 55% of firms viewed business rates as a major or moderate cost. Around 17% had cut jobs in response to the burden, while 31% had raised prices.
This would be a “major shot in the arm” for many high streets and communities, which it said have been forced into cutting jobs, investment and raising prices due to the pressures of rising business rate bills, according to the alliance.
In addition to business rates, Murray noted that Frasers is dealing with higher employment costs after increases in the national minimum wage and employers’ National Insurance contributions.
Business rate cuts for hospitality put wider retail into focus
Murray also took aim at plans to grant pubs and music venues a 20% business rates discount while imposing extra charges on large warehouses. He said warehouses serving physical shops should not be treated the same as distribution centres run by online-only retailers.
Murray also called for lower rates on shops to reduce the tax disparity between online pureplays and retailers maintaining town-centre estates.
Frasers continues store investment
Despite the hurdles presented by business rates, Frasers is continuing to grow and refresh its physical estate under its Elevation Strategy. Its new Sports Direct and Everlast Gyms+ flagship in Dublin spans 85,000 sq ft over four floors at the former Debenhams site on Henry Street.
The “landmark” opening, which has created 75 new roles, marks a major €80 million investment in Dublin city centre and also signals the official launch of HOKA in Sports Direct stores, further strengthening the retailer’s position as a strategic partner for the world’s biggest sports brands