Spring budget: Retailer sector feeling hard pressed and disappointed
Following today’s spring budget from Chancellor Jeremy Hunt, industry experts across the retail sector have suggested that the support offered is hard pressed and disappointing.
Hunt delivered what he called a “Budget for growth” today, which he said would provide support for people amid the cost-of-living crisis, bring down inflation and providing a pathway for economic growth.
For businesses, Hunt said the government would “lower business taxes and reduce energy prices”. He said the UK would have the lowest headline rate in the G7 despite the rise in corporation tax to 25% in April 2022, from 19%.
He also confirmed that the government would extend the Energy Price Guarantee (EPG), which caps the bills at £2,500 for a typical household, for a further three months until June.
To support families with childcare costs, and encourage women back into the workplace, the chancellor said the government will offer 30 hours of free childcare for every child from the age of nine months, where both parents are working.
The Federation of Independent Retailers (the Fed) says the Chancellor of the Exchequer’s Spring Budget failed to address a number of factors that are threatening the very existence of many smaller retail businesses.
A major disappointment for smaller shops is a lack of support on high energy bills. And while a continued freeze on fuel duty is of some comfort, a hike in tax on alcohol and tobacco is another blow.
The Fed’s National President Jason Birks said: “I and other trade associations wrote to the chancellor and the business secretary just last month imploring them to provide the necessary help for struggling small businesses.
“It is, therefore, extremely disappointing that our calls for assistance have not been answered.”
Mr Birks said the tax rises on alcohol and tobacco will also lead to an increase in illicit trading, which again is harmful to honest shopkeepers and fuels organised crime.
He added: “The chancellor has shown a complete disregard for shops that are the lifeblood of their local communities.
“I make no bones about it – we will see many forced to close their doors for good as businesses become unviable in the current economic climate.”
Helen Dickinson, Chief Executive of the British Retail Consortium, said: “In the face of volatile demand caused by high inflation and low consumer confidence, measures to support households with the cost of living, such as the ongoing energy bill support and changes to childcare costs, are welcomed. However, many businesses are weighed down by a myriad of higher costs right through the supply chain.
“Government must do more to limit one of the biggest drags to retail investment, which is oncoming regulatory burdens heading down the track, or risk a crash in business investment and further inflationary pressures.
“The Chancellor understands the need to train people to re-enter the workforce, yet he missed a key opportunity to fix the issues with the Apprenticeship Levy system that would support this very goal. Over the last three years, businesses have lost £3.5bn in unused Levy funds. To break this cycle of wasted investment, it is vital that Government allows businesses to use their hard-earned Levy funds for a wider array of skills courses.
“The broken Business Rates system remains a drag on business investment, jobs, and economic growth. Rates must be paid in full whether firms are making a profit or a loss. This makes Business Rates the final nail in the coffin for many struggling stores; shutting shops, costing jobs and preventing new stores openings. The Chancellor should make good on the Conservative 2019 pledge to reform Rates and lay out a clear roadmap for future reforms.”
Amber Mace, UK&I Consumer Products & Retail Sector Leader, commented: “The Chancellor’s announcement of full expensing of capital expenditure for the next three years will be welcome news for consumer products and retail businesses, with the move at least partially offsetting the corporation tax rate rise from 19% to 25% next month.
“Towns and cities that are dependent on their High Streets have been particularly affected by the squeeze on consumer spending, but details of 12 new proposed UK Investment Zones could see accelerated development, time-limited tax benefits and wider support for local growth within towns and cities across the UK. This, combined with overseas R&D costs remaining allowable for another year, should also have a positive impact for the sector.
“The labour market measures also appear supportive, with retail likely to welcome childcare reform in helping both current employees and others looking to return to work – although the benefit will not be felt for some time given the staged rollout.”
