The current business rates system is “fundamentally broken” and is in need of urgent reform at the Budget, the chief executive of the Co-op has warned in an interview in which she also endorsed Labour’s contentious workers’ rights package.
Shirine Khoury-Haq told the Today Programme that business rates were one of the driving forces behind declining high streets, adding that Co-op’s bill for the tax had gone up 20 per cent in just two years.
“We’ve long called for reform for the business rates system, which we believe is fundamentally broken,” Khoury-Haq said. “And you only have to look at our UK high streets to see that it’s an issue.”
Business rates – the equivalent of council tax for businesses with a bricks and mortar presence – have been the subject of fervid campaigning from firms with a presence on the High Street.
Despite a business rates relief being in place since the pandemic, the levy has gone up rapidly for many retail and hospitality firms, whose business models rely on having a physical presence the city.
Businesses protest tax hit
The relief is due to be wound down on 31 March, prompting 170 hospitality firms, including giants of hospitality like JD Wetherspoon, Caffe Nero and IHG Hotels, to sign an open letter warning of a £900m hit to businesses earlier this week.
Khoury-Haq, who became the Co-op’s first female chief executive in 2022, added her voice to those warnings, saying: “For us, our business rates have increased £20m over the last two years – that’s 20 per cent – up to £111m per annum. So, we are hoping that the Budget will address that in order for us to be able to revitalise our high streets.
Co-op’s chief Shirine Khoury-Haq
“There needs to be protection of bricks and mortar stores and there needs to be equity in terms of online businesses paying their share of tax as well…
“For us, we are the most shopped shop on the retail high street – we have 2.5m transactions every day, over 800m transactions per year. We are absolutely committed to staying on the high street as long as it’s affordable for us.”
On workers’ rights
The boss of the supermarket, which has roots that can be traced back to 1844 with the establishment Rochdale Pioneers’ consumer co-operative movement, also voiced support of Labour’s worker’s rights package, providing businesses are properly consulted.
“When we look at the workers’ rights that have been proposed by the government, we’re actually encouraged to see a number of things that we’ve been doing for some time being put on a statutory footing,” she said.
The government’s workers’ rights overhaul was a flagship policy of the Labour Party’s manifesto in the run-up to this summer’s general election.
It has divided the business community, with some arguing it constitutes an overdue modernisation of labour laws, and others, especially small business groups, warning that it would foist expensive and damaging administrative costs on already-stretched employers.
But Koury-Haq sought to appease jittery business owners, and urged the government to carry out a diligent consultation with businesses.
“To businesses, I would say: ‘Do look at other businesses that have been doing this for some time, and look at the benefits that they’ve derived from being able to keep their employees in the workforce, and motivated.’” she said.
“To the government, I would say: ‘Please do consult with business. Please give as much advanced warning as possible, and work with business to be able to implement this in a considered way.”