Tesco's chairman has delivered a stark warning to Westminster, urging the next government to resist hiking business rates as Britain battles persistent inflation.
John Allan, who chairs Britain's largest supermarket chain, cautioned that any increase in the controversial tax on commercial properties would inevitably force retailers to pass costs onto consumers through higher prices.
The Budget Battle Ahead
With a general election looming and the Treasury seeking revenue streams, business rates have become a focal point in economic discussions. The current relief scheme, which offers 75% discount up to £110,000 per business, is set to expire in April 2024.
"The biggest single thing the next government could do is not put up business rates," Allan stated emphatically. "I think it would be a huge mistake if business rates were to go up, because that's just going to feed into inflation."
Supermarket Squeeze
The retail sector faces a perfect storm of challenges:
- Soaring energy costs affecting both stores and supply chains
- Persistent wage inflation across the industry
- Rising costs from suppliers struggling with their own expenses
- The potential business rates increase adding further pressure
"All of these things are putting costs into the system," Allan explained. "And ultimately, they have to be passed on to consumers in one way or another."
Consumer Impact
For millions of British households already grappling with the highest food inflation in decades, any additional price increases could prove devastating. The warning comes as families face the toughest cost-of-living crisis in generations.
While food price inflation has shown recent signs of easing, it remains stubbornly high at levels not seen since the 1970s. The potential business rates hike threatens to reverse any progress made in bringing down grocery bills.
Industry-Wide Concerns
Tesco isn't alone in its concerns. The British Retail Consortium has repeatedly called for business rates reform, describing the current system as "broken" and arguing it puts physical retailers at a disadvantage against online competitors.
As the budget decision approaches, all eyes will be on whether the government heeds these warnings or risks adding fuel to Britain's inflationary fire.
