Jason Tarry, the new chairman of John Lewis, has pressed the government to honour its promise to overhaul business rates. Tarry stated, “After employment costs, it’s the second biggest cost in any retailer’s P&L and over the years the growth in business rates has been disproportionate.”
He said reforms announced in the last Budget amounted only to a “short-term” solution and reiterated the need for a root-and-branch review as outlined in the government’s manifesto.
Currently, business rates are calculated based on the value of physical property, placing a heavier burden on traditional retailers compared with their online competitors. Tarry described this as a critical imbalance and insisted fundamental change is required to ensure the long-term health of the high street.
Criticism of current business rates system
The existing business rates regime has long been criticised by industry leaders for disproportionately affecting bricks-and-mortar shops. While some changes introduced in November were designed to alleviate the impact on the sector such as targeted support and a lower multiplier for certain categories retailers maintain these do not address deeper structural problems.
Tarry argued that the present system penalises businesses which maintain a physical presence in communities and warned that the lack of substantial reform remains a barrier to growth for the sector.
He added, “It’s great that the government listened to the challenge of business rates multiplier and did what it did, but that fundamental review which is a manifesto pledge is still something that we’re really interested in hearing about.”
Impact of recent reforms on retailers
Chancellor Rachel Reeves has emphasised that measures announced last November were designed to support the high street. These included a reduction in the multiplier for many retailers and a package worth £4.3 billion intended to cap increases in business rates bills for eligible firms.
However, sector voices point out that while some businesses have seen relief, others particularly small leisure and hospitality firms have faced higher costs as a result of the redistribution.
This situation has strengthened calls from business leaders and trade groups for a more robust, long-term framework that supports all parts of the retail sector.
Wider economic challenges affecting retail sector
Alongside business rates, retailers continue to face broader financial pressures. The John Lewis Partnership, which also owns Waitrose, has returned to profit and reinstated its staff bonus according to the latest accounts, but cited “headwinds” from higher national insurance costs and new packaging taxes.
Retail industry groups have further highlighted the tension between rising employment costs and the need to preserve flexible roles, particularly for young workers.
Many employers warn that without further support or a new approach to business taxation, job opportunities especially for younger staff could be at risk.
External pressures: youth unemployment and global events
Jason Tarry has also expressed concern about the number of young people not in work, education, or training, a figure that official estimates put close to one million. “We do everything we can to ensure that we do our bit,” he stated, highlighting the social responsibility held by major employers.
Additionally, ongoing conflict in Iran and resulting disruption in the Strait of Hormuz has triggered warnings from industry groups about potential price increases on goods.
Despite this, senior John Lewis executives have sought to reassure consumers, citing the company’s flexibility in sourcing and its hedging strategy for energy and utilities. Tom Deynard, managing director at Waitrose, said the group is committed to maintaining quality at affordable prices, regardless of changing conditions.
Government response and future outlook
A spokesperson for HM Treasury stated, “We’re reforming business rates to back the high street with a £4.3bn support package, alongside capping Corporation Tax at 25%, cutting red tape and taking action on the cost of living.”
The Treasury noted that changes now mean high street businesses are seeing rates reduced, partly funded by increased charges for larger online warehouses. As retailers continue to call for more comprehensive reform, the government faces ongoing scrutiny over both the implementation and scope of its promised overhaul.
The coming months are likely to see further debate as the sector navigates both domestic and international economic uncertainties.
Final Summary
The request from Jason Tarry and John Lewis for urgent business rates reform underscores a wider debate about how the UK supports its high streets and physical retailers. While the government has introduced limited relief and acknowledged sector concerns, many businesses maintain that a substantial, structural review of the system is needed to ensure fair competition with online retailers.
Persistent challenges such as high operating costs, employment pressures, and global uncertainty continue to put strain on the retail sector, prompting industry figures to maintain pressure on policymakers.
The Treasury’s assurances of ongoing support have been welcomed to an extent, but the call for deeper reform remains prominent among leading retailers. For those monitoring the evolving business climate and taxation changes, the Pie app provides updates and insight on developments affecting the sector.
