Excessive business rates cited as a 'strong influence' on B&Q space reduction plans

THE owner of B&Q is planning to cut 15% of its selling space in Britain — a decision its boss said was strongly influenced by excessive business rates.

Kingfisher, which also owns Screwfix and several European brands, has already told shareholders it wants to reduce the size of 18 B&Q stores to shrink its footprint by 5%. The move would save £16m on rental costs and £7m on rates.

It is now preparing to cut another 10% of space by downsizing more shops.

The news comes as more retailers throw their weight behind The Sunday Times campaign to overhaul the dysfunctional business rates system. Greggs, House of Fraser, Morrisons, Super Group and Hammerson, the shopping centre landlord, all want urgent reform of the £22bn-a-year tax to save shops and jobs.

Ian Cheshire, chief executive of Kingfisher, said rates savings formed “a very significant part of our decision-making” when it came to reducing the size of stores. “It is a pressing issue for us and it is leading to stores being downsized, closed or sold,” he said.

Greggs is reviewing its estate of 1,700 bakeries. Roger Whiteside, the chief executive, said some would be relocated or closed. “A crucial part of that determination is how much overhead in each unit is fixed, and obviously the higher the rate and rents are the likelier it is that overhead will make the store less viable,” he said.

Dalton Philips at Morrisons said the supermarket chain saw the rates regime as “ripe for reform”. Julian Dunkerton of Super Group suggested moving to a sales-based tax.

Hammerson said its shopping centres, including the Bullring, Birmingham, generated £190m of tax a year for the government, compared with a rent bill of £140m.

The high streets minister, Brandon Lewis, said relief for small businesses had been doubled over the past three years. He added: “For all other firms, business rates remain linked to inflation so there has been no real-terms increase in more than 20 years.”

Source : Oliver Shah - The Sunday Times
www.thesundaytimes.co.uk