Fifteen major retailers or restaurant groups have gone into CVA or administration in the twelve months since the April 2017 Business Rates Revaluation, according to Colliers International, the global commercial real estate agency and consultancy, with ten of them since the beginning of this year- in the last three and a half months alone.
And, according to John Webber Head of Business Rates, there seems to be little reprieve on the horizon going forward. “These figures are as bad, if not worse than the crash of 2008/9 when 16 companies went into administration- 12 in 2008 and 4 in 2009- and we are only in April now.”
Colliers has calculated that already around 12,000 jobs have been lost or are on the line. “We wonder how many more retailers are going to get into trouble or people lose their jobs before someone decides to tackle the problem properly.”
Colliers has calculated the rating bills of each of the household names [mostly, those with 20 stores or above] that have gone into administration or announced CVAs since the 2017 Revaluation and the types of bills they are either facing or would be facing in 2018/9 if still trading.
The figures show that together they saw a rates bill of over £152 million last year and would be hit with an even higher bill this year, with the bills starting to hit the mat now.
Some of this the Chancellor will now be missing from his rates tax take this year. The table below includes Conviviality’s Bargain Booze and Wine Rack stores, which were part of its retail chain which was bought in a pre-pack administration and Carpetright, which recently announced it was closing 92 stores and axing 300 jobs.
|Year of Administration/ CVA||Company||No Stores Closed/Looking to Close||Est Rates Bill (m) 2017/8||Est Rates Bill (m) 2018/9|
|2017||Feather & Black||20||£0.55||£0.58|
|2017||Handmade Burger Co||9||£1.3||£1.4|
|2018||Toys R Us||105||£21.9||£21.9|
|2018||Bargain Booze + Wine Rack||+||£3.26||£3.42|
|TOTAL TO DATE||£152m||£154m|
+Not yet announced how many stores will be closed/jobs lost
This worrying picture is why Webber and many other rating experts feel the Chancellor missed a trick in his Spring Budget by failing to tackle the issue of business rate reform, leaving many businesses and retailers out to dry, particularly as the new 2018/9 rate bills for April 1st start to hit home.
As Webber sums up, “Toys R Us was struggling with a rates bill of £22m a year and it finally went down because it could not pay a £15m VAT bill. ”