Rates changes hint and staff worries – the fallout of House of Fraser’s rescue
PUBLISHED: 06:15 11 August 2018 | UPDATED: 15:25 11 August 2018
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A change in the business rates system could be on the cards after the latest high street casualty, House of Fraser, was narrowly rescued from ruin.
Sports Direct owner Mike Ashley swooped in to save the department store chain in a £90m deal after it went into administration on Friday.
There have been few details about Mr Ashley’s plans for House of Fraser’s 59 stores, which includes one in Norwich’s Chapelfield shopping centre.
Now, the government has indicated that it could bow to mounting pressure to reform the punitive business rates system after the tax was named among factors which contributed to House of Fraser’s downfall.
Toys R Us, Maplin, East and Poundworld are among this year’s victims of the maelstrom battering the retail sector.
Chancellor Philip Hammond said any changes to the system would aim to even the tax burden between bricks-and-mortar retailers and online rivals.
He said some international tax treaties may have to be renegotiated as many big online businesses are international companies.
Liberal Democrat leader Vince Cable went further and called for business rates to be scrapped to “create a level playing field between the high street and the big tech retailers”.
With all 59 stores and 17,000 jobs saved at House of Fraser, a period of transition will now begin for the 170-year-old retailer.
But some have voiced concerns given the track record of staff treatment at Mr Ashley’s primary firm, Sports Direct.
The Unite union said despite a media storm over the treatment of staff at Sports Direct’s Shirebrook warehouse, wages remained at a minimum and employment conditions were “threadbare”.
Scott Lennon, Unite regional officer with responsibility for Sports Direct, said: “Sports Direct is a leopard that has not changed its spots and we hope that its poor record on pay and employment practices are not transferred to the House of Fraser.”
Shadow business secretary Rebecca Long-Bailey said Mr Ashley was “notorious” for Sports Direct’s “poor treatment” of workers.
Mr Ashley beat off competition from retail rival Philip Day, the billionaire owner of Edinburgh Woollen Mill.
It is understood that Mr Day’s proposal was in excess of £100m, would have avoided an administration and included House of Fraser’s pension scheme.