Booksellers have confirmed that they expect the April business rates rise to have a “serious” impact on their business, despite the increase being capped below inflation.
High street retailers will see a 2% increase in business rates in the new financial year.
The rate was capped below the anticipated 3.2% in the Autumn Statement, with Chancellor George Osborne also giving every retail premises with a rateable value of up to £50,000 a discount of £1,000 off their bill for the next two years.
However, booksellers have told The Bookseller the measures do not go far enough and the 2% increase will put a further squeeze on their margins in a climate where physical book sales are dropping.
Woolfson & Tay bookshop on Bear Lane, London SE1, is due to close in the next few weeks after finding the conditions for independent bookselling too tough to continue trade. The bookshop, café and events space moved to Southwark from Bermondsey last year, but is due to close again in February.
Fran Tay said: “We must face the undeniable fact that we're making more from our cafe operations than from our book stock… all the signs suggest that there is little scope in the immediate future to emerge as a successful indie bookshop-come-literary and community hub - we have come to the conclusion that it's time to pack it in.”
She told The Bookseller: “Business rates are a huge factor in trying to trade. Anyone who wants to go into independent retail needs to find out the rateable value. I think rates need reviewing because we have gone through a recession but the rates haven’t changed. Because house prices around the area have gone up, they have driven up the rateable value of our property. The fact that this premises was vacant for three years doesn’t come into it. That is what we are up against.”
Tay added that since the shop’s closing down sale had begun, books had suddenly become quite popular with her customers. “I think people like a bargain,” she said. “I thought we had set up in an area where people didn’t buy books, but in the first three days of our closing down sales we have sold more books than we did in the whole month of December. I think there are book readers out there but they aren’t necessarily book buyers, or they buy their books from Amazon where it is cheap. Independent retailers can’t operate like that.”
Marilyn Brocklehurst from Norfolk Children's Book Centre Norwich told The Bookseller’s Independent Christmas Trading Survey that the impact on her shop from the increase in business rates in April would be “serious.” She said: “We are always running close to our margins anyway.” Jim MacSweeney Gay's The Word Bookshop in London said: “Business rates are potentially ruinous at the moment. Anything which limits an increase is to be welcomed although the current system needs to be reviewed and completely overhauled.”
Meanwhile James Howarth from The Edge of the World Bookshop in Penzance, said: “We get completely hammered with business rates. Any increase is bad. If one thing closes us down, it'll be business rates.”
The heads of chain high street retailers have also joined the call for the business rates system to be overhauled in a landscape where internet shopping continue to grow in popularity. James Daunt, the m.d of Waterstones, told The Bookseller: “Business rates are a tax on the high street that really need to be addressed because it does not reflect the changing nature of retail, with more and more sales going through the internet. It is not as if one gets a great service in return for that tax. It is not a tax that is levied by anything like the same degree on internet businesses.”
In slightly more positive news for the high street, the Local Data Company has reported that the number of empty shops on UK high streets fell to their lowest levels in three and a half years in December. The rate of town centre shop vacancies was 13.9% last month - the first time the rate has fallen below 14% since July 2010.
There are now 21,975 empty shops in the top 650 town centres, the Local Data Company estimates.