Skip to main contentSkip to navigationSkip to navigation
Mike Coupe.
Mike Coupe: ‘The way it currently stands, there is an advantage for those without bricks and mortar operations.’ Photograph: Sainsbury's/PA
Mike Coupe: ‘The way it currently stands, there is an advantage for those without bricks and mortar operations.’ Photograph: Sainsbury's/PA

Sainsbury's chief calls for 'fundamental reform' of business rates

This article is more than 7 years old

Mike Coupe, whose firm faces rise of almost £120m to £500m, says changes to levy will benefit online firms such as Amazon

The chief executive of Sainsbury’s has waded into the row over business rates, describing the existing system archaic and calling for “fundamental reforms”.

Adding to mounting pressure on the government to reconsider the controversial levy, Mike Coupe said that the shake-up would reduce bills for online retailer Amazon while many of its high street rivals would face sharply higher bills.

The supermarket boss is the latest critic of the first rates overhaul in seven years, which are due to come into effect from 1 April.

Coupe said: “The way it currently stands, there is an advantage for those without bricks and mortar operations, so there’s a strong case for a level playing field in business rates and taxation more generally.”

He added: “Businesses like ours with lots of property and employees face a bigger burden than others.”

The overhaul is linked to the revaluation of properties that should take place every five years but was controversially delayed in 2015 ahead of the general election.

More than half a million firms face rates rises of up to 300%, according to the Federation of Small Businesses (FSB), although transitional reliefs would limit some of the pain.

The government has mounted a staunch defence of the changes after business groups including the CBI, British Retail Consortium and the FSB made a joint call to ministers to rethink the changes.

They are particularly concerned that small firms could be blocked from appealing against rates rises and have asked for that clause to be dropped. The shake-up also highlights the tax discrepancy between businesses that depend on physical shops and their online-only rivals.

Sainsbury’s is facing a rise of almost £120m to about £500m, while Amazon will enjoy a lower business rates bill for most of its huge warehouses, according to analysts.

Coupe has called on ministers to undertake a wide-ranging review of the way businesses are taxed, taking into account changes in the retail sector such as the rise of online-only players.

“Our challenge to the government is for a fundamental reform of business rates, because we believe it is an archaic and outdated system. More than that, we’d like the government to look at business taxation in general,” he said.

Business rates are linked to property valuations, so companies with properties concentrated in the south-east of England and cities will be disproportionately affected by the revaluation.

Companies in London alone will face a £9bn rise in rates over the next five years, while bills for those in the north are likely to stay the same or fall. Pubs, hospitals and hotels are also among those set to be landed with hefty increases.

Business rates for some retailers will jump by 400% as fears mount that the revaluation will result in store closures.

If the revaluation goes ahead, Coupe warned: “We could see high streets face serious challenges and ultimately more closures. It could impact investment in places that most need it, in areas of the country where there is already a marginal call on investment.”

The government has accused those that have raised concerns of “scaremongering”, claiming that the majority of firms will see a drop in rates or no change to their bills.

David Gauke, the chief secretary to the Treasury, said: “Three-quarters of businesses are actually going to see their business rates fall or stay the same. Outside London, average bills are falling by 11%. So it is right that we bring it up to date.

“It is also right that there is transitional support for those one in four businesses that are seeing an increase in their business rates. We have got a £3.6bn transitional package to try to smooth that increase. But it is right that we bring business rates values up to date to reflect current rental values.”

Most viewed

Most viewed