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Stop killing the high street: big retailers and small businesses beg politicians for tax relief

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Britain's high streets face a future like this unless the Government stops hiking costs such as business rates, retailers have warned Credit: Dinendra Haria/Rex Features

Surging wages and bumper tax bills are killing the high street, threatening jobs and crushing investment, according to two of the country’s biggest business groups.

Fixing the “broken business rates system” is key to boosting investment and revitalising the economy, according to a letter to the Chancellor from more than 50 retailers, including national chains such as Greggs, Boots, Sainsbury’s and John Lewis.

“Retail accounts for 5pc of the economy but pays 10pc of all business taxes and 25pc of all business rates. The rate has risen by 50pc since business rates’ inception in the 1990s, and 20pc in the last decade alone,” said the letter, co-ordinated by the British Retail Consortium and backed by the bosses of M&S, Iceland Foods, Primark and dozens more.

Freezing the rates multiplier “to stop yet another tax rise”, cutting bills in the Midlands and North of England, encouraging investment through “improvement relief”, and revaluing properties promptly would be a huge help, the bosses said.

“The measures would kick off the process to facilitate the required changes in our high streets, protect jobs and maintain the strong community connections retailers have,” they wrote.

Business rates are an important source of Government revenue, however. The tax brought in more than £30bn in the last financial year. The Office for Budget Responsibility expects that to rise to almost £35bn by 2023-24.

Meanwhile the Federation of Small Businesses called for politicians to stop putting up the national minimum wage because it is undermining SMEs’ ability to invest and grow.

“While politicians are locked in a battle of who can make the boldest promises on pay, they fail to acknowledge that – within many smaller businesses – bigger pay packets often mean less investment, fewer training opportunities and higher prices,” said Mike Cherry, the group’s national chairman.

“With pay now outstripping inflation, it’s harder and harder for small business owners to put funds aside for the investment needed to close the UK’s productivity gap.”

He called for the wage to be set independently by the Low Pay Commission, which was set up alongside the minimum wage in 1997 to advise on how high the wage could be set before it prices too many workers out of a job.