The Scottish Retail Consortium has published a detailed written response to the Scottish Government’s Draft 2024-2025 Budget.
The seven-page submission, sent earlier this week to the Scottish Parliament’s Finance and Economy Committees and Finance Secretary Shona Robison MSP, provides a retail industry perspective on key announcements in the Budget which pertain to the retail industry, consumers, and wider economy, including income tax, non-domestic rates and reliefs, and skills. It also critiques the proposed business rates surtax on grocery shops.
Retail is Scotland’s largest private sector employer providing a quarter of a million jobs. However, recent data shows retail sales have been at a low ebb, shopper footfall is still shy of pre-pandemic levels, and store vacancies remain elevated.
The key points outlined in the submission:
- SRC had called in advance for Ministers to prioritise cutting their own costs base over tax rises to tackle the deficit in the public finances. Instead measures to mitigate rising costs on business were insufficient, further cost pressures were added, and some firms face new burdens.
- SRC was in the vanguard of the campaign to secure a freeze to the Basic Property Rate and welcomes the fact Ministers listened and acted on industry representations.
- Deep disappointment that the rates freeze was not extended to premises liable for the Intermediate and Higher Property Rates. This will mean 4,550 stores will pay considerably more in rates from April, a 6.7% rise which is above current CPI inflation and the biggest yearly rise since 1999.
- Alarm that Ministers are countenancing the introduction of an arbitrary Scotland-only Public Health Supplement surtax on certain larger retailers, and SRC says this apparent breach of the SNP manifesto opens the door to smaller retailers and other sectors of the economy being similarly targeted if problems with public finances persist.
Commenting on the submission, David Lonsdale, Director of the Scottish Retail Consortium, said:
“The more this guddle of a Budget is scrutinised the more concerning its implications become. 4,500 shops will face enormous increases in business rate bills as the poundage soars to the highest rate since devolution began. With retail sales last year flat in real terms, and labour and commodity costs increasing, customers will be the ones to lose out as retailers look to cut their cloth accordingly.
“Regrettably it appears the situation may be worse in the future. In the depths of the Government’s Budget is an oblique, unclear, and not consulted upon threat to introduce a new surtax on large grocery retailers. This would be a retrograde step and firmly at odds with the so-called ‘New Deal for Business’. Grocers, who already face expensive regulatory interventions on alcohol, HFSS foods, and the troubled deposit return scheme, now face an additional tax – one which even the Scottish Government admits is nothing more than a cash grab. This breach of the SNP’s own manifesto risks deterring investment from retailers, but more than likely other sectors as well who will fear the arbitrary crosshairs of new taxes if the Scottish Government again finds itself short of money in the coming years.
“The combination of new taxes, increasing business rates, and cuts to skills funding makes it hard to discern a coherent plan to grow the Scottish Economy in this muddled Budget. Scotland’s economy isn’t in great shape and the Budget seems set to make things more challenging. Retailers will hope the New Year is an opportunity for Scottish Ministers to change tack, at the very least ditch the absurd and uncompetitive shopping surtax.”
Ends
- The SRC’s Post-Budget Submission can be read in full here: https://brc.org.uk/media/684090/post-scottish-budget-submission-january-2024.pdf
- The SRC made a submission to the Finance Secretary in August 2023 laying out the retail industry’s priorities, it can be read here: https://brc.org.uk/news/2023/scottish-budget-src-seeks-action-on-deficit-tax-growth/