Trade bodies respond to Chancellor’s spring statement

At lunchtime today, following on from Prime Minister’s Questions, Chancellor of the Exchequer Rachel Reeves made her spring statement, which focused largely on spending on defence and changes to welfare in the UK.

While no new taxes or tax raises were announced, and any increase in tobacoo duty was not mentioned, the previously reported rises in employment costs triggered at the autumn budget has prompted responses form the key trade bodies in our sector. 

The Association of Convenience Stores’ (ACS) chief executive, James Lowman, said: “The Chancellor again stated today that promoting business investment is central to her strategy. She needs to look carefully at how increases in employment costs and business rates are in fact making it harder for businesses to invest, because at the moment our members are cutting back wherever they can to cover the additional costs hitting their businesses from next week.

“As the cost of employing colleagues rises, local shop operators are already reducing staff hours in their stores. For many businesses, there are no further staffing cuts to be made. We will see store closures and with them the loss of essential local services unless the government provides more help through investment incentives, mitigations against growing employment costs. and more business rate relief.”

After the Autumn Budget, the ACS estimated that cost increases would amount to over £666m in the coming year without taking into account the additional burdens and costs of new regulations. This is the result of the reduction in business rates relief, the increase in employer National Insurance Contributions, and the increases in the National Living Wage rates.

Also responding to today’s speech, Helen Dickinson, chief executive at the British Retail Consortium, agreed with the ACS: “The Chancellor has committed to tearing down regulatory barriers and implementing policies to grow our economy and create jobs. And yet retailers are facing tough choices as they try to find ways to address the £7bn in new costs this year as a result of increased employer NICs, higher wages, and the new packaging tax. The impact of this will be higher prices, fewer shops and less investment in jobs.

“We welcome the Chancellor’s commitment to ’drive growth in the economy’ and the retail industry is keen to play its part in this mission. As the Chancellor aims to drive down the number of those who are ‘economically inactive’, there is a need for better routes back into work for those that want or need it after a period of inactivity.

“The retail industry provides a perfect solution. It is filled with people joining and returning to the workforce. It offers local, flexible jobs, often requiring few qualifications, and part-time jobs that allow people to find their feet, work as much or as little as they are able, and balance work with other important life commitments.

“But the costs from the budget, and uncertainty about how the Employment Rights Bill and new business rates policy will be implemented, mean it will be much harder for retailers to keep creating these kinds of jobs. So the government should avoid unintended consequences and provide clarity about the implementation of these policies as soon as possible. A serious plan for retail growth would support the industry to invest in new jobs and keep prices down for customers.”

Andrew Goodacre, CEO of the British Independent Retailers Association (BIRA), is calling Rachel Reeves to address three crucial areas to support independent retailers and revitalise high streets across the UK. He said: “While we understand this statement may not introduce major tax changes, we believe there are vital areas where the Government must demonstrate its commitment to the future of British high streets.

“We need to see continued investment for town centres and high streets across the country to maintain momentum in regeneration efforts. The Government must also ensure that policing is fully funded to properly address retail crime, which has become increasingly concerning for our members. Additionally, we’re calling for economic development to become a statutory requirement for local authorities, creating consistency in how high streets are supported nationwide.

“Independent retailers form the backbone of our high streets and local economies. With the challenges facing the retail sector, including the aftermath of the pandemic and current economic pressures, it’s essential that the Government prioritises support for our members.”

Finally, the Federation of Independent Retailers (the Fed) noted that there were no significant changes to the major tax plans announced in the October budget.

The Fed’s National President, Mo Razzaq, said: “The Fed is greatly concerned about impending higher costs from increases in employer national insurance contributions and above inflation increases in the National Living Wage due in the coming days when the new financial year starts in April.

 “Higher government costs come at a time when the overall economic outlook looks challenging, with growth under-performing, inflation ticking up and government spending being taken away from the economy.

“Our members are key to the government’s growth agenda, which is the right goal, but this can only be achieved if we’re able to afford to employ staff and help them learn and develop.”