Growth and Infrastructure Bill

Memorandum submitted by Poundland (GIB 79)


These are the Representations of Poundland for submission to the Public Bill Committee. I can confirm that I would be more than happy to appear before the committee if required to do so.

I refer to the recent announcement of the Government's proposal to postpone the 2015 Rating Revaluation until 2017 and write to provide informed comment on what I strongly believe is a reckless decision given the current decline of the retail market.

The postponement of the 2015 revaluation only serves to continue the injustice of businesses paying inflated business rates in a depressed climate. As one of a reducing number of successful retailers, the impact of this decision will have a major impact across our entire portfolio of in excess of 400 stores, impacting on circa 10,000 store colleagues.

It is difficult to understand the logic behind a decision which will impact many retailers as they continue to struggle and face financial hardship. This decision will undoubtedly force yet more retailers to join the likes of Clintons, Peacocks and JJB to name but a few of the more recent casualties.

Our business relies upon the estimates of business rates during the period of the rating list, which are key to the financial models on which we base our decisions on opening new stores, relocating and extending existing properties. The financial model works on the assumption that from a 2015 revaluation, the levels of value at 2013 (AVD) will produce a lower rates payable across the entire portfolio and adjustment in rates payable from 2015 across the 180 new stores we have opened since 2010.

The postponement of the revaluation until 2017 will surely have unintended consequences and will mean that, in some situations, new store viability will be, at best, marginal. We employ circa 30 colleagues per new store and the proposed plans to delay the revaluation will undoubtedly reduce this number significantly.

The postponement will not only impact on our appetite to acquire new stores but will aid the continuation of increasing vacancy levels on the high street until a revaluation is undertaken. This decision compounds the current desperate state of our high streets. Our Government claims to be helping the high street, indeed, the Mary Portas Review was designed to show that the Government was indeed listening to retailers and helping grow town centres. This decision is a direct contradiction.

Many retail centres have witnessed significant falls in rental value since 2008 and as a result, the business rates liability as a proportion of the overall outgoings has increased. This is an anomaly many retailers have relied upon being corrected as part of the 2015 revaluation.

Our overall rates liability contributes to 29.3% of total property costs and represents

47% against our rental liability which runs disproportionately to the market. How can our Government possibly justify a postponement which will result in businesses continuing to pay rates based upon rents at the market's peak in 2008 rather than have them readjusted to fit with the present economic climate? This decision only benefits London occupiers.

As far as we understand it, there has been no period of consultation whatsoever. Not only do we ask that the Government revisits the decision to postpone the revaluation, but suggest that serious consideration should be given to yearly revaluations which will provide a true reflection of market conditions at that time.

Delaying the revaluation only serves to delay the structured recalibration of the high street which is needed for it to survive. This will only promote the move of retailers to toward online operations which could mean waving goodbye to the retail high street altogether.

December 2012

Prepared 10th December 2012