Major UK retailers including Marks & Spencer and Tesco have warned Andy Burnham that a business rates raid could drive up the cost of living.
The coalition of major chains warned that increasing tax burdens on large stores would also hit jobs and investment at physical locations across the country.
The warning was delivered in a letter sent by the Retail Jobs Alliance ahead of the upcoming Budget on 28 October, which is being prepared by the Prime Minister and Chancellor John Healey.
Signatories to the letter include Marks & Spencer, Tesco, Sainsbury's, Morrisons, Primark, Asda, and Kingfisher, the parent company of DIY retailer B&Q. The appeal was also signed by Usdaw, the Union of Shop, Distributive and Allied Workers, which represents around 370,000 members.
In the joint submission, big firms urged that future tax changes should support continued investment by bricks-and-mortar retailers across the country rather than piling higher costs onto physical storefronts.
Rising costs and price pressures
High street retailers had already struggled with a total of £7bn in extra costs and taxes over the past year. These cumulative burdens included business rates, packaging levies, and higher wage bills.
The coalition warned that these rising operational costs act as a direct cost driver on prices for consumers. Imposing further tax increases would place even greater pressure on retailers' ability to support customers through competitive pricing and cost of living initiatives.
In their letter, the retailers stressed that physical shops play a critical role in local communities but cannot absorb endless tax hikes. "Retail stores are integral to high street renaissance but they cannot continue investing in communities if they face an ever-increasing tax burden," the letter said.
Business rates are commercial property taxes levied in the UK based on the rateable value of a property, which reflects its estimated rental value, along with size-based multiplier rates. For large retail chains operating major stores, these rates represent a primary fixed tax expense.
High street ecosystem at risk
Retail leaders also expressed concern over government proposals to fund tax relief for hospitality venues by raising taxes on large retail premises.
Labour has already announced plans to give pubs and music venues a 20 per cent discount off their rates bills starting next spring. The government has also ordered a consultation into how business rates bills for hotels and pubs are calculated, following a manifesto commitment to level the playing field between traditional high streets and online giants.
However, the alliance warned that cutting rates for hospitality while increasing costs for retail puts the wider high street ecosystem at risk. The letter noted that businesses including pubs and restaurants all rely on vibrant town centres with strong footfall and consumer spending, which major anchor shops help to create.
By lowering tax bills for hospitality venues while raising expenses for retail stores, the overall benefit of helping venues will inevitably be reduced, the letter added.
Property multipliers and employment impact
Concerns are growing ahead of the October Budget that premises with rateable values above £500,000 will be hit with higher tax payments starting next spring. A higher property multiplier was introduced last year for properties in this tier, which includes large department stores, major supermarkets, and online warehouses.
The Retail Jobs Alliance has asked ministers to exempt all physical bricks-and-mortar retail stores from this higher multiplier.
The request comes alongside wider pressures on retail businesses and food supply chains. Record heatwaves this summer have sparked fresh concerns over food prices in the coming months, while retailers and food producers are also experiencing increases to their energy bills.
The coalition warned that higher business rates would severely impact investment, employment and the viability of anchor stores across the country.
The letter also highlighted recent youth employment statistics, noting that last week's figures revealed 981,000 people aged 16 to 24 were not earning or learning between April and June.
Exempting physical shops from the tax increase would support the government's commitment to growth in every postcode by safeguarding retail employment, which forms the foundation of vibrant high streets and local communities, the letter concluded.
