Backlash grows over business rates fiasco as Kingfisher reveals £31m budget hit

The boss of B&Q owner Kingfisher last night joined the chorus of retailers calling for an “urgent” review of business rates to help offset the pain inflicted on British businesses in the Budget.

As Rachel Reeves attempted to defend her tax and spending plans at the CBI conference, Thierry Garnier said a radical overhaul of the hated rates system was “even more vital” given the additional costs facing the High Street.

Retailers suffered a £7bn hit to the Budget when the Chancellor reneged on Labour’s manifesto to increase National Insurance and approved an increase in the minimum wage to combat inflation.

In another costly setback for the industry, it left the High Street facing a £140m rise in business rates bills and postponed any significant reform of the system until 2026.

The British Retail Consortium estimates that 17,300 stores could close over the next decade unless the tariff regime is reviewed.

The issue has been highlighted by the Mail’s Save Our High Streets campaign.

Garnier revealed that Kingfisher – owner of Screwfix as well as B&Q and a member of the FTSE 100 index of top British companies – will take a £31m hit next year from the rise in National Insurance alone.

The company also faces £14m in additional taxes in France, where it owns Castorama.

Kingfisher shares fell 13.3 per cent, leaving it valued at £5.35 billion, as extra costs and weak sales led it to lower profit expectations for the year to between £510 million and £540 million, after having previously targeted up to £550 million.

“With all the additional costs facing the retail sector, it is even more vital and urgent that we see fundamental business rates reform to reduce the unfair burden on all retailers with shops,” Garnier told the Mail.

Business rates are a local tax based on the value of a commercial property, meaning stores pay a premium compared to online giants like Amazon.

Well-known names from Marks & Spencer to Currys have criticized this, calling it unfit for purpose and at odds with the modern era.

The Labor Party promised to “replace the business rates system” in its manifesto to “level the playing field between the High Street and the online giants”.

But instead of taking radical action in the Budget, Reeves cut Covid-era rates relief from 75 per cent to 40 per cent and imposed a cap of £110,000.

Starting a “conversation” about what a fairer system would look like, he proposed lower bills for smaller buildings, but not until 2026, which would be paid for by higher bills for more valuable properties.

Garnier said this will “simply penalize retailers with larger stores and further slow investment, growth and job creation across the country.”

Gavin Peck, chief executive of stationery chain The Works, echoed their concerns, saying: “We have repeatedly called for rates to be reviewed as the system is an unbalanced method of raising taxes and is completely out of touch with property values.” .’

He said he hopes “significant change will be implemented” but added that until then, he faces national insurance and minimum wage increases, as well as a higher business rates bill.

In his first budget as chancellor last month, Reeves announced £40bn of tax rises, including a £25bn National Insurance raid on employers.

“There is no doubt the extent to which the business has been exploited in the last budget,” said CBI chairman Rupert Soames.