Marks & Spencer’s business rate liabilities are now based on a rateable value of over £570 million, according to commercial real estate agency and consultancy Colliers International.
The news follows the announcement that the retailer plans to close 14 stores, putting 468 jobs at risk.
Colliers said this emphasises the continued pressure on UK retailers like M&S, caused by rising prices, falling real wages and large increases to business rates.
Explaining the rateable value, the company said that because the government allowed a seven-year gap between the last revaluation in 2010 and last year’s revaluation (usually the gap is five years), retailers saw some huge increases on particular stores, which they are now needing to finance, particularly those with stores in city centres.
For example, M&S stores in Hampstead, Westfield and More London saw business rate rises of 170%, 133% and 111% respectively.
Whilst coping with rises in these stores, the situation has been made worse by the fact that those stores in locations in the UK, which should have seen relief from the 2017 rating revaluation, are not yet seeing the impact, said Colliers.
This is due to the government’s policy of phasing in reductions, whereby it takes five years of transition until businesses in England are allowed to pay their business rate bills at the new revalued levels.
As a result, many retailers with stores which should have benefited from the 2017 revaluation are still paying much more than expected.
In M&S’s case, stores in Shrewsbury, Altrincham and Stockport which should have seen reductions in their rates liability of 52%, 47.7% and 46.5% only saw their rate bills drop by 3.5%, 3.4% and 3.3%. Stockport is one of the stores on the closure list.
John Webber, head of rating at Colliers International, said: “The government decision to delay the business rates revaluation to 2017 and to introduce the policy of transition is certainly impacting on UK retailers, either by giving massive rises in some areas and little relief in others. By delaying business rates reaching their true levels, retailers with stores in the less attractive areas have been forced to pay for the better ones for far too long.”
And, added Webber: “Marks & Spencer is by no means alone.”
Colliers has analysed the business rates liabilities of other major retailers with stores around the country – such as House of Fraser and Debenhams.
Debenham’s total rateable value is now £150 million following the 2017 revaluation, the firm’s calculations found. Some stores also saw RV rises of over 50% or 100% (Westfield +133% and Oxford street +57%) whereas those such as Newbury who should have seen a reduction of 20% are only seeing a tiny reduction in their rate bills – 1% in 2017/8 and -3% in 2018/9 due to downward phasing.
“Retail pain has not stopped and is on the increase. The Spring will bring in further casualties until something is done to help the physical retail chains, including perhaps capping rate rises,” said Webber.
Colliers is campaigning for a business rates reform, including more frequent valuations and the need to offer more support to the Valuation Office Agency so it can deal with the estimated 200,000 outstanding business rates appeals in the system.