The Treasury should hike corporation tax to fund a £6bn business rates cut for struggling high streets, according to a government-commissioned report prepared by leading industry figures.

Sky News has learnt that a sub-committee of the Retail Sector Council - established by ministers in 2018 - will make the recommendation in a document to be shared across Whitehall in the coming weeks.

The council, which is co-chaired by Kelly Tolhurst, minister for small businesses, consumers and corporate responsibility, counts the ASOS CEO Nick Beighton, Amazon UK country manager Doug Gurr, and Sir Charlie Mayfield, former chairman of the John Lewis Partnership, among its members.

Its other co-chair is the former Co-op Group chief executive Richard Pennycook, who now chairs the family-owned department store business Fenwick.

It was launched in response to the mounting crisis in Britain's retail sector, which has seen hundreds of thousands of jobs disappear and thousands of shops shut as retailers have struggled to cope with a lethal cocktail of shifting consumer habits and soaring costs.


That maelstrom shows few signs of abating, with the Office for National Statistics saying recently that retail sales had failed to rise for a record fifth consecutive month in December.

Data published by the British Retail Consortium in October showed the number of shoppers visiting high streets, retail parks and shopping centres had slumped by 10% during the last seven years.

Already in 2020, Beales, the department store chain, has collapsed into administration, threatening 1300 jobs, while Mothercare brought the curtain down on decades of high street history by closing the last of its British shops.

Image: The retail industry employs close to three million people

Sources said that the Retail Sector Council's business costs working group had decided to make a dozen recommendations, covering areas ranging from VAT reform to greater transparency around tax and property costs.

A meeting of the council is understood to have been scheduled to take place on Wednesday to finalise its report.

Among its key proposals is that corporation tax should rise by 2%, which would raise roughly £6bn annually by 2022-23.

According to a source who has been briefed on the working group's recommendations, this additional revenue - which would be equivalent to 20% of total business rates income - would be used to reduce the business rate multiplier to roughly 40p in the pound.

Business rates have been increasingly cited as a factor in the high street's travails, prompting scores of shop owners to write last year to urge Sajid Javid, the chancellor, to freeze future increases.

Many retailers have renewed their pleas to the Treasury ahead of next month's Budget.

Data shows that since 2010 the business rate multiplier in England has soared from 41.4p in the pound to 50.4p - a rise that industry experts regard as ludicrous given the wider pressures that retailers are facing.

Nevertheless, the Retail Sector Council is likely to be aware that a general increase to business taxation in order to benefit one sector of the economy will be a controversial request.

Speaking at the CBI's annual conference weeks before the general election, Boris Johnson said the Conservatives would scrap planned corporation tax cuts this year and next - saving £6bn.

The retail industry, which employs close to three million people, constitutes Britain's biggest commercial workforce.

Its most senior figures have complained for years that it is caught in an unfair pincer of frictional costs, with the Apprenticeship Levy, National Living Wage and rising rents also adding to a financial burden they regard as intolerable.

Image: The number of shoppers visiting high streets has slumped by 10% during the last seven years

During the last five years, many of the UK's best-known retailers - including Sir Philip Green's TopShop chain, Carpetright, Debenhams, House of Fraser, Monsoon Accessorize and New Look - have been forced to negotiate with creditors to seek cost reductions.

Some, including Toys R Us UK, have plunged into administration and disappeared from high streets even after securing approval for Company Voluntary Arrangements.

A large number of casual dining chains, including Gaucho and Cote have also been forced to seek rescue deals from creditors.

Retail bosses have criticised what they see as an unlevel playing field as they compete with online rivals saddled with few of the same costs.

Dave Lewis, the outgoing chief executive of Tesco, has called for a digital sales levy that would fund a reduction in high street stores' business rates.

Mr Javid is now reportedly preparing to introduce such a tax, despite trenchant opposition from the Trump administration because of its likely impact on US-based technology companies.

Retail bosses warn that without urgent action to tackle the crisis facing high streets, the number of vacancies will soar further - well beyond the 10.2% rate reported by research firm Springboard early last year.

A separate high streets task force was set up last year by the government to provide regeneration funding, although critics suggest the accompanying financial support will be insufficient to arrest long-term decline.

Other sub-committees of the Retail Sector Council, including those addressing consumer protection, skills and lifelong learning and the circular economy, are expected to report their proposals later this year.

None of the members of the Retail Sector Council contacted by Sky News would comment on the contents of the working group's report.

The Department for Business, Energy and Industrial Strategy declined to comment.