Responding to the Chancellor’s Budget, Helen Dickinson, Chief Executive at the British Retail Consortium, said:
“It was a mixed bag Budget that offered relief for many shops, but brought in new costs for others. Retailers face a delicate balancing act as they strive to invest, hire, and keep prices affordable. The announced permanent reduction in retail business rates is an important step to reduce the industry’s burden from this broken tax. Yet the decision to include larger retail premises in the new surtax does little to support retail investment and job creation. The welcome plan to scrap the damaging de minimis loophole was weakened by a 2029 deadline. And while increases in the National Living Wage were in line with expectations, the rise to the minimum wage for under-21s could limit employment opportunities. All in all, we will see winners and losers across retail and the impact for consumers will unfold in the coming months, but this Budget does not go far enough to mitigate the inflationary pressures already bearing down on the industry.”
Business Rates:
“This Budget offered much-needed relief for some retailers, but fell short of the bold action needed to secure the long-term future of our high streets and mitigate the inflationary pressures which are currently pushing up prices for households. While the announced changes to business rates are a step in the right direction, many felt the Chancellor should have gone further. The 5p rates reduction for retail, hospitality and leisure properties with a rateable value below £500,000 is unlikely to fully fix the situation where retail, as 5% of the economy, pays over 20% of all business rates. Including supermarkets and anchor stores in the new surtax is a retrograde step that does little to mitigate the rising cost of food and essentials. Larger stores, which already pay one third of the industry’s business rates bill and employ around a million people, should have been exempted from a surtax intended to fund support for the high street.”
On Employer NI and National Living Wage:
“Retail employment costs have risen significantly over the last year, with last year’s Budget changes to employer National Insurance and the National Minimum Wage adding £5 billion to retail costs. With food inflation nearing 5% and 100,000 jobs lost in retail over the last year, further cost rises are challenging for retailers to absorb, given tight retail margins. But the NLW uplift announced by the Chancellor was in line with the core expectations announced by the Low Pay Commission, providing stability for retailers’ financial planning.
“The higher increases for under 21s, when coupled with concerns of retailers about the implications of some provisions in the Employment Rights Bill, will do little to encourage the employment prospects of younger people.”
On Salary Sacrifice:
“Changes to salary sacrifice will hurt retail employees and businesses alike. For many retail colleagues, this will act as a brake on their pension savings. For retailers, these changes will cost hundreds of millions, punishing those businesses with strong pension offerings, and/or forcing them to reduce the contributions they make to their employees’ retirement security.”
On Low Value Imports:
“While we welcome the decision by the Chancellor to close the de minimis loophole, the proposed timeframe is simply too long. There are 1.6m parcels arriving in the UK every day, double what they were last year, and businesses cannot afford any delay on scrapping the existing rules. The US has already removed its threshold, with the EU following suit next year; the Chancellor must take decisive action and remove the exemption as fast as possible. This will help protect British consumers from the risks of imported goods that don’t meet the UK’s stringent environmental and ethical standards, while promoting fairer competition.”
On the Soft Drinks Industry Levy:
“Supermarkets invested huge sums to bring down the sugar content of their own-brand drinks, which is why no own-brand supermarket products currently pay the Levy. However, by lowering the sugar threshold and including milk-based drinks, some own-brand products will begin to be captured. This will push up the prices paid by consumers at a time when food inflation is high.”
On removal of VAT on direct donations:
“This small tweak by the Chancellor will make a big difference and open the doors for more retailers to donate goods directly to the charities and organisations delivering help and aid to families everywhere. It rectifies a quirk of the tax system which previously meant that while donations of goods for onward sale received VAT relief, donations of goods intended to be given to people free of charge incurred a financial penalty.”
