In a bid to bolster the UK economy and address key challenges facing the nation, Chancellor Jeremy Hunt's 2024 Spring Budget has elicited a range of responses from various quarters. While the budget includes measures aimed at lower taxes, increased investment, and better public services, concerns have been raised regarding its impact on the retail sector and broader built environment.
Retail landlords express disappointment
The decision to adjust the rules concerning business rates relief for vacant properties has drawn criticism from retail landlords. Under the new rules effective from April 2024, the 'reset period'—a period during which a property becomes eligible for rates relief after being occupied for a certain duration—will be extended to 13 weeks. This change, while intended to encourage property occupation, has left many landlords frustrated. According to comments from industry experts like John Webber, Head of Business Rates at Colliers, this alteration may exacerbate the financial burden, potentially dampening property investment and value in an already distressed market.
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Moreover, the failure to address the planned business rates increases scheduled for April has further fuelled disappointment. Webber argues that such increases, particularly for larger companies, are economically detrimental and could exacerbate the challenges faced by the High Street: 'This planned increase will impact 220,000 businesses. We have estimated that the businesses in the retail sector will pay over £360 million more in business rates, the offices sector around £400 million more and logistic/ industrial sector around £450 million more as a result of the increased multiplier.'
'This week M&S CEO Stuart Machin described the 6.63% increase in business rates for larger companies as "economically illiterate" and called for it to be reversed. Such a policy puts the High Street under even greater threat than it is already.'
'We were also disappointed to see that the Chancellor did not extend the retail, hospitality and leisure relief for small companies that he announced in November. The temporary nature of the relief requires an annual review which leaves many businesses unable to plan for more than a year in the future. No pub, restaurant, café or small shop can realistically plan for the future if they are peering over the cliff edge of a 75% increase in their rates bill next year,' Webber explains.
All in all, Webber thinks it's a very disappointing Budget in terms of business rates. 'The Chancellor spoke of creating a tax regime pro-business, designed for further "levelling up" and competing on the European stage. Yet nowhere else in Europe do businesses pay approaching 60% the rental of their premises in property taxes and at current levels this is unsustainable.'
Calls for sustainable solutions
Royal Institute of British Architects (RIBA)'s President Muyiwa Oki also emphasised the necessity of a sustainable solution for the country's housing crisis: 'The Government has lost sight of the bigger picture and missed a key moment to improve our buildings – especially our homes. A weak economy, housing crisis and climate emergency demand urgent attention.'
Oki urges the government to apply a National Retrofit Strategy to improve energy efficiency and sustainability in existing homes. 'Today's investment in new housing is welcome, but it's a drop in the ocean compared to what is needed,' he says. 'While the budget includes investments in new housing, critics argue that these efforts may fall short of addressing the magnitude of the housing shortage.'
As the UK navigates economic uncertainties and confronts pressing societal challenges, the Chancellor's budget reflects a mix of initiatives aimed at fostering growth and addressing key priorities. However, concerns persist regarding its impact on sectors such as retail and the housing industry. Moving forward, critics urge a collaborative and forward-thinking approach to ensure sustainable solutions that promote prosperity and resilience across all sectors of society.