Reeves extends rates relief for retail [Budget commentary]

Chris Brook-Carter, chief executive of retail industry charity Retail Trust: “Retail is the largest employer outside of the public sector so a healthy and happy retail workforce is important for our industry and for the country’s communities and high streets and its GDP.

“Yet right now, thousands of shop workers are contacting the Retail Trust to say they’re being forced to consider leaving a job they love and often have worked in for many years because they no longer feel safe there. We therefore welcome with open arms the new funding being announced to crack down on retail crime and provide more training to police officers to help better tackle this issue.”

“We’re also supportive of the government’s commitment to extend business rates relief and introduce permanent and lower rates from 2026 if it can help to give retailers more confidence to plan for the future to ease much of the uncertainty and insecurity currently facing everyone working in the industry.

“Increases to the national minimum wage and national living wage will also support many people across the retail sector by giving them the pay raise they deserve.

“And we fully agree with the Chancellor when she says that ‘healthy businesses depend on a healthy NHS’, and hope that new NHS funding will help address the declining levels of mental health we are seeing amongst the retail workers the Retail Trust supports, particularly the sector’s youngest workers who we’ve found are most likely to be taking time off or working whilst unwell.

“However, while we recognise that the need to raise more money to fund these vital NHS services comes with some difficult decisions, we echo the concerns from some in the retail sector about the long-term impact of increased National Insurance Contributions on both employers and their staff.”

Charlotte Broadbent,  UK general manager at Faire, the online wholesale marketplace, said: “We welcome the Chancellor’s commitment to easing the pressures on the UK high street and on small businesses, and it’s a relief for retailers that this budget has taken some action on extending the business rates discount for retailers beyond April next year and freezing the tax multiplier. But reducing the rates discount from 75% to 40% will still mean a steep increase for them next year, at a time when many are already facing significant financial challenges.

“Permanent lower tax rates on retail, hospitality, and leisure properties from 2026-27 are promising, but proof will be in the detail and immediate relief is essential to keep high streets resilient in the face of economic pressures.

“We’re also supportive of raising the employment allowance, which should come directly off every small employers’ National Insurance bill next year.

“At Faire, we remain committed to supporting our community of over 50,000 independent retailers in the UK through these challenging times, by offering tools and solutions to help with financing, managing costs and growing sales.”

Meanwhile, the British Independent Retailers Association has condemned the Budget as the most damaging for independent retailers in recent memory.

Andrew Goodacre, chief executive of Bira, said: “This is without doubt the worst Budget for independent retailers I have seen in my time representing the sector. The government’s actions today show complete disregard for the thousands of hard-working shop owners who form the backbone of our high streets.

“Small retailers, who have already endured years of challenging trading conditions, now face a perfect storm of crippling cost increases. Their business rates will more than double as relief drops from 75% to 40%, while they’re hit simultaneously with employer National Insurance rising to 15% and a lower threshold of £5,000, down from £9,100. Add to this the minimum wage increase to £12.21, and many of our members are telling us they simply cannot survive this onslaught.

“One member has already calculated these changes will increase their cost base by £150,000 next year alone,” he said.

Goodacre added: “For all the government’s rhetoric about supporting small businesses and revitalising high streets, their actions do precisely the opposite. These punishing measures will force many shop owners to make heart-breaking decisions about their businesses’ future.

“What makes this particularly bitter is that these are family businesses, often built up over generations, run by people who work incredibly long hours to serve their communities. They’re now being asked to shoulder an impossible burden while trying to compete with online giants who face none of these cost pressures.

“This is clearly an anti-high street Budget. I can only assume that the government is happy for working people to shop online and buy cheap imports. This government has shown complete disregard for the local businesses that create jobs and maintain vibrant communities,” he said.

A recent survey released by Bira showed that 46% of retailers reported worse trading in early 2024 compared to 2023, with 42.6% expressing low confidence for Q2 2024.

Mr Goodacre said: “This Budget betrays every independent retailer who has fought to keep their business alive through recent challenges. It’s not just disappointing – it’s potentially catastrophic for Britain’s high streets.”

Michelle Buxton, Revo Board member, said: “Sadly the Chancellor’s announcement has made things worse for retail and leisure businesses with many reliant on the 75% business rates relief. With this now reduced to 40% and with minimum wage and national insurance contributions increasing while the multiplier remains static, or is set to increase, cost increasing will be painful for those in the retail and leisure sector. Although we welcome the promise of a business rates discount for retail from 2026, it is kicking the can down the road and does little to encourage investment and innovation across the retail and leisure sector, in line with the government’s growth agenda.

“Revo’s recently released Future Insights found that a thriving retail and leisure sector had the potential to unlock economic growth across the UK. Meanwhile, a recent joint study between Revo and Lambert Smith Hampton found that 71% of people believed business rates reform was the most useful government intervention to support town centres. However, by failing to go further to address this major barrier to entry for those seeking to support the retail and leisure sector, this Budget announcement has missed the chance to secure increased investment which would have created safe and thriving communities and led to economic prosperity across the UK.”

 

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