It is welcome news that M&S is planning a £480m investment across its UK stores, generating, as reported, more than 3,400 jobs and opening five new full-service stores: in Leeds White Rose, Liverpool One, the Bullring Birmingham, Manchester Trafford Centre and Lakeside Thurrock.
Obviously, multiple factors play a part in the decision for store expansion. But there is no doubt a more favourable business rates environment for retailers, which we will see following the April 2023 rating revaluation, is playing a part.
This is helped by the fact the government listened to pressure from industry and decided not to introduce a downwards transition scheme, allowing retailers to pay lower rate bills immediately following the start of the new list in April.
Overall, the retail sector will see a 10% decrease in rateable value (and rates bills) in the next list, although some locations will see much higher reductions of 30% or 40%. Large department stores and hypermarkets are among the biggest winners – for example, on London’s Oxford Street, rateable values have fallen by around 30%.
Looking at M&S’s decision to open its new store in the vacant Debenhams unit in the Bullring, we estimate the rates liability of that store will be reducing by around 47% in the new list in April. This means a saving of over £500,000 in annual business rates payable.
Looking at M&S’s overall portfolio, we estimate it should see around a £70m drop in its UK annual rates bills come the revaluation in April, compared with its rates bills this time last year – a reduction of around 23%.
These immediate and substantial reductions will surely affect decisions to keep stores open or even open new ones. And not just for M&S, but other retailers too.
In its decision not to introduce downwards transition in its latest revaluation, the government finally got one thing in its business rates policy right. But we should not be complacent and think it has nothing else to do. We need to keep calling the government out to improve the system further and make it fit for business in the 21st century.
John Webber, head of business rates, Colliers