Westfield to cut service charges

Westfield is being forced to cut service charges at its London mall after some retailers refused to pay part of their charge following an increase in fees just days after the west London retail centre opened.

The reduction is expected to be announced within weeks, after the stand-off with retailers over Westfield's decision to raise the annual service charge from a guide of £8.50 a square ft to £14, making it one of the most expensive shopping centre fees in the UK.

Denis Carruthers, director of shopping centre management and marketing at Westfield, said the developer was completing a cost-reduction exercise and aimed to cut the charge, barring any unforeseen circumstances

"Right now, we are reasonably comfortable that we can deliver a reduction in the current quoted service charge," he said.

Westfield has cut the costs of operating in the majority of its shopping centres in the UK by 8 to 10 per cent. Mr Carruthers said this was the sort of reduction the group would be aiming for at Westfield London.

Part of the expected reduction in service charges will come from plant and machinery, such as escalators and lifts.

The expected reduction may not be enough to satisfy some shopkeepers. One retail executive said he was aware of the exercise, but had not yet been given any indication of a cut in service charges.

Mr Carruthers denied that the expected reduction at Westfield London was linked to problems signing up tenants for its retail centre at Stratford, east London, due to open in September 2011.

Separately, the head of Sony UK said the government had "effectively signed the death warrant for many fundamentally sound UK retailers" with the supply chain insurance scheme announced in the budget.

Steve Dowdle, managing director of Sony UK, said the size of the scheme meant many bigger retailers would be "left out in the cold" while limiting eligibility to companies' whose cover had been reduced after April 1 "smacks of shutting the door after the horse has bolted".