A leading retail organisation has levelled criticism at the Spring Budget for failing to turbo charge investment and growth in communities.
The Chancellor, Jeremy Hunt, announced his Spring Budget, with a number of headline developments. This includes a 2p cut in National Insurance from April 6. Combined with the 2p cut announced at Autumn Statement 2023, Government says this will save the average worker on £35,400 over £900 a year. To support people with the cost of living, the Government is maintaining the rates of fuel duty at the current levels for a further 12 months, through extending the temporary 5p cut and cancelling the planned increase in line with inflation for 2024-25, saving the average car driver £50 in 2024-25.
The Chancellor also said the government is committed to supporting small businesses and at Autumn Statement 2023 announced an extension to the 75 per cent business rate relief for eligible retail, hospitality and leisure properties for 2024-25, a tax cut worth £2.4 billion. Spring Budget goes further to support SMEs by increasing the VAT registration threshold from £85,000 to £90,000 to cut their taxes and help them grow.
However, responding to the Chancellor’s Spring Budget, Helen Dickinson, Chief Executive of the British Retail Consortium, said: “When shops we love shut down, when jobs we need are absent, and when investment we benefit from is lost, it’s our lives and our communities which lose out. Retail employs three million people and invests over £17bn annually, yet the industry’s ambition to deliver a net zero, digitally transformed future with higher skilled, better paid jobs means its potential goes so much further. It seems the Chancellor does not share in our ambition, and today’s Budget will do nothing to deliver a better future for retailers and their customers.
“The cost-of-living crisis has taken a toll on businesses and households. Consumer confidence remains low and retail sales volumes in 2023 were the lowest in four years. Yet the Chancellor has done little to promote growth and investment, instead hindering it with the business rates rise in April. This has consequences for jobs and local communities everywhere – from the smallest villages to the biggest cities.
“The cut to National Insurance might go some way to supporting households impacted by the high cost of living. However, unless Government addresses the government-imposed cost increases, we may yet see the spectre of higher inflation return, limiting the benefits to households of lower National Insurance.”
Speaking on business rates, Dickinson added: “Government inaction will now cost the retail industry £470m extra every year in business rates – money that could have been better spent improving our town and city centres, investing in lower prices, and maintaining jobs and commerce all over the UK. How can a whopping 6.7 per cent tax rise in April be justified, when the Chancellor himself is saying inflation is forecast to be nearer two per cent?
“This rise in rates does not exist in a vacuum – retailers are also contending with cost pressures throughout the supply chain, in the context of the largest increase to the National Living Wage on record. Government has had five years to fix the problems with business rates, as they promised in their election manifesto. Retailers pay over £7 billion a year in business rates – over 22 per cent of the total raised by the tax. This is disproportionate, destructive, and any Government that is serious about growing the economy must address this as a matter of urgency.”
And on crime, she went on: “The Chancellor noted that burglaries and violent crime had halved. This simply doesn’t tally with the experience of thousands of those working in retail. The number of incidents of violence and abuse rose to 1,300 per day in 2022/23 from 870 the year before. No one should have to go to work fearing for their safety. The Protection of Workers Act in Scotland already provides additional protection to retail workers, so why should our hardworking colleagues south of the border be offered less protection? It is vital that government takes action – introducing a new standalone offence for assaulting or abusing a retail worker.”
Also commenting was the British Independent Retailers Association (Bira), with its Chief Executive, Andrew Goodacre, advising: “We welcome the Chancellor’s decision to reduce National Insurance rates, providing consumers with additional disposable income. We hope that this financial relief will boost consumer confidence, enabling them to spend more on the high streets. However, while we acknowledge the positive impact of the NI rate cuts on consumer spending, there is a missed opportunity in not addressing the planned seven per cent increase in business rates, which remains a concern for the retail sector.
“We remain cautious about long-term economic growth, and there is the need for initiatives that drive employment and production. The association believes that sustained economic growth is crucial for the growth of businesses, and more measures are needed to support this aspect.”
