Suffolk: Revealed - Tesco business rates slashed to counter opening of new Sainsbury’s store in Sudbury
12:11 02 October 2014
A major row erupted last night after it emerged that Tesco received a £118,000 cut in its business rates when a rival supermarket opened nearby in a west Suffolk town.
Retailers in many of the county’s towns have long campaigned for drastic amendments to the system, which they say is “inequitable” and needs to change to protect smaller, independent traders.
The Government’s Valuation Office Agency (VOA) assesses rateable values for out-of-town supermarkets and DIY stores under a different system to town centre shops.
And now official VOA figures, accessed via the agency’s website, show the rateable value of Sudbury’s out-of-town Tesco has been reduced by more than 7% as a result of Sainsbury’s opening a new store two miles away.
Last night, a Tesco spokesman declined to comment on the figures, which he said were set by the Valuation Office.
But Ian Berry, who has helped to run Kestrel Bookshop in Sudbury’s Friars Street for many years and has been lobbying MPs about the rates issue since 2009, said the Tesco case proved that town centres were “subsidising the out of town giants”.
He said: “The 7% reduction in Tesco’s rates amounts to £118,617 and this figure alone is about nine times our shop rates for a secondary position in town.
“To base the cut on competition from Sainsbury’s is ludicrous as we are all in competition with the supermarkets these days because they sell almost everything.
“Perhaps now all of us in Sudbury town centre, only about half a mile from Sainsburys, will be able to claim at the least a 30% reduction in our business rates if we consider the supermarket to be in direct competition with us. That, of course, will apply to just about every shop in the town.”
Mr Berry said he feared that if Tesco could secure a reduction based on competition, it could set a precedent for other supermarkets.
He has written to Colchester MP Bob Russell about business rates, who raised the issue in Parliament.
Another Sudbury retailer, David Holland, said the Government’s focus appeared to be on “doing what is right for the big players”.
He added: “They have taken their eye off the town centre retailers and the economy of local towns.”
Champion of local food, Lady Caroline Cranbrook, described the inequity of the system as “shocking”. She said: “Business rates are high enough as it is for businesses in small towns so anything that disadvantages them further is not going to encourage a greater diversity of businesses.
“The system is obviously inequitable and needs to be urgently addressed.”
John Dugmore, CEO of Suffolk Chamber of Commerce, said: “One of the many important issues firms across Suffolk raise year on year is the pressing need to address business rates.
“We are seeing increased growth in our local economy which is due to the hard work and entrepreneurial spirit of local businesses. This must not be put at risk and as a Chamber we have continued to lobby and campaign for an overhaul of business rates.”
“With a General Election just around the corner we’ll be working with business big and small to ensure important issues to commerce, such as business rates, are raised with our representatives in Parliament.”
Graeme Willis, from the Campaign to Protect Rural England (CPRE), said: “National planning policy is geared to making sure that growth is in town centres, to support thriving town centres, so it is perverse that the rates system works in reverse to the planning system by benefiting the out of town retailers.”
“Aside from the changes in shopping behaviour, the main threats to small shops come from the supermarkets and rising rents. There is also evidence to show that they are further disadvantaged by the workings of the valuation process and, as a result, pay far higher business rates per square metre than supermarkets.”
A spokesman for the VOA declined to comment.