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Aodhan Connolly

Retail sector in NI needs 12-month rates break

Aodhan Connolly


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Belfast streets have been empty for weeks due to the pandemic

Belfast streets have been empty for weeks due to the pandemic

Belfast streets have been empty for weeks due to the pandemic

The retail industry is our largest private employer, employing over 100,000 people and constitutes 12% of the Northern Ireland economy.

Our members are represented in every high street and town centre across the nation.

That is why we welcomed both the Stormont and Westminster Governments' decisive and positive responses to the rapidly unfolding health crisis.

Crucial decisions on a three month business rates break, introducing the Covid Corporate Financing Facility and Coronavirus Business Interruption Loan Scheme, and the welcome moves to support staff through the Coronavirus Job Retention Scheme, were powerful measures to support businesses and people who, through no fault of their own, were facing economic calamity.

But the scale of the crisis facing the retail sector is grave. While sales may have increased in certain sub-sectors, such as food retailing and household items, these are temporary in nature and is being offset by greatly increased costs.

It's also not representative. The majority of retail businesses are experiencing dramatic falls in turnover of up to 100% - and of course vastly reduced sales. The same is, of course, true for businesses in many other sectors.

Most retailers operate on minute profit margins - the retail sector's average margin had fallen from 4% in 2013 to 2.5% prior to the start of the crisis.

Most operators do not have significant cash reserves to fall back upon given the scale of fixed costs that they continue to have to meet. For them, survival is now being measured in weeks rather than years.

Unless further action is taken, we will see many otherwise viable companies file for administration, with the consequent loss of jobs, devastating impact on communities and high streets, and increased cost burden on public funds, not to mention threats to the income generation for pension funds, amongst others.

There is a real risk businesses that were fundamentally sound prior to the start of the coronavirus outbreak will not be able to survive even a short period without urgent, more fundamental support.

Supporting staff who have been furloughed will be of limited benefit if the business they work for has folded by the end of lockdown.

Even when restrictions are lifted, the economic recovery and the pathway back to full operation for many of these businesses is unlikely to be strong or quick enough.

That's why we need to learn from the success in other areas of the UK in how they have given tangible and meaningful support for industry.

Firstly and most urgently we need the rates holiday to be moved from three months to 12 months in line with Great Britain.

Being a property heavy industry, business rates is one of retail's greatest out-goings and this extension of relief would aid cashflow, but also business confidence.

The Scottish Government's equivalent £25k and £10k grants schemes are open for applications until the end of next March while ours closes this May.

Also, the Scottish scheme has just been amended to cover second and subsequent properties. That is exactly the level of support that our businesses in Northern Ireland need.

Time is of the essence. Without rapid action on rents, we risk creating unnecessary unemployment and economic harm that will ripple across the economy for years to come.

That must be avoided if we want to ensure a bright future for Northern Ireland's economy.

Aodhan Connolly is Director of the NI Retail Consortium.

@MichaelAodhan

Belfast Telegraph