Marks & Spencer: Major retailer with branches in Telford and Shrewsbury issues stark warning on store closures
A major high street retailer with stores in Telford and Shrewsbury has warned it may have to close its larger high street stores as a result of changes to business rates.
Marks & Spencer has led a retail backlash to Chancellor Rachel Reeves's plans to increase business rates on larger properties, set to take effect next year - and warned that store closures could follow in the wake of the new scheme.
The Government said its new business rates reform will create a "fairer" rates system which protects smaller high street businesses by placing a greater tax burden on larger high street stores.
The changes would primarily affect stores with a rateable value - the calculation used by the valuation office to determine how much is paid in business rates - higher than £500,000.
Marks & Spencer has 10 stores in the West Midlands which would qualify for the higher tax bracket in that scheme, and the firm runs flagship operations in the Telford Centre shopping mall and on Castle Street in Shrewsbury.
Last month, the company said it intended to shut down its "underperforming" store in Wolverhampton, around a month after the retailer announced plans to close around 80 stores as part of a property restructing programme.
And there are fears more could follow, after the company submitted scathing written evidence to the Government during a consultation over the planned new taxation scheme.
"We believe the business rates system is broken. It penalises firms who invest in a bricks and mortar presence in places across the UK, contributing to rising vacancy rates and declining footfall," said a spokesperson, in a written submission to the Communities and Local Government secretary.
"The system also places a disproportionate tax burden on retail, which makes up only around 5 per cent of the economy but pays 7.4 per cent of all taxes borne by business, and 21 per cent of business rates.
"The Government’s proposed reforms don’t fundamentally change the rates system – and could even make it worse. The measures in Transforming Business Rates involve marginal tweaks to the system, largely redistributing the burden of taxation within the retail sector."
Marks & Spencer, which employs 65,000 staff in more than 1,000 stores across the UK, said the changes would hit just over 20 per cent of its current stores.
In its evidence, the company accused the Government of "rushing through" the reforms, adding that "if larger shops close, smaller shops suffer".
"The proposed reforms could therefore accelerate the decline of the high street by encouraging retailers to close larger high street stores, particularly when these measures come on top of recent changes to National Insurance which are particularly difficult for retail, and at a time when vacancy rates are up and footfall down in towns and cities across the country," it added.
"The Government should deliver what it promised: a fundamental review of Business Rates to secure the future of the high street and support investment and job creation in the retail sector."
