UK Retailers and Pubs Say Budget Rates Relief Falls Short
Small retailers and hospitality owners welcomed parts of John Healey's first budget as chancellor but said it does not undo the cost increases of the past two years.
Healey set out to help high street operators. He took the business rates burden off more small businesses and limited the rise in the minimum wage for younger workers. Rates will rise only in line with inflation for two years. He also moved against VAT dodging by online sellers, so that online marketplaces such as Amazon collect VAT from more of them. Two earlier Labour budgets under Rachel Reeves had loaded extra costs on to businesses.
"Letting the tyres down"
James Nye runs Anglian Country Inns, which has 10 venues across Norfolk and Hertfordshire and employs 500 people at the height of the season. "It is like letting the tyres down and then handing you a pump," he said. He saw a "couple of steps towards helping" but more labour costs for companies already stretched.
The rates relief for smaller venues is unlikely to help his firm directly, Nye said. The legal minimum wage rises again from April, which will more than offset the rates change for most. He was also disappointed that VAT on hospitality was not cut and that national insurance contributions for younger workers were not reduced. Nye hopes the chancellor's support for household energy bills “might help consumer confidence”, but said: “We were expecting a little bit more to offset the massive tax increases hospitality has faced.”
"We are being crippled by taxes as a sector and the cumulative tax burden is horrific. We pay 83% as a percentage of our profits in tax," Nye said. He added that his biggest fear is that hospitality becomes "a luxury rather than a convenience."
"Safe but isn't going to change anything"
Dean Richmond owns the Pets Corner chain. His parents founded it in 1968, and it now has 159 stores and 1,200 staff. He said the budget did not fix the "fundamental problem" that costs rise faster than sales. On rates he called it "moving the deckchairs on the Titanic" and said offline retail needs a bolder shift. He does not expect much benefit from the higher threshold at which rates start to be paid.
Richmond welcomed the VAT move on online marketplaces. He was disappointed that the end of tax breaks for sellers such as Shein and Temu, which import cheaper goods, was not brought forward. Earlier budgets were "really damaging," he said; this one is "safe but isn't going to change anything." "It is not a good news budget with the minimum wage going up," he said, on top of earlier changes to employers' national insurance contributions. The Crawley-based business has made "pretty drastic cuts" to staff and bonus incentives, and has turned to hiring older, more experienced people.
Spencer Hannah co-founded Herdy, which has five shops in Cumbria and 28 direct employees. He backed the chancellor's aim of supporting British firms that trade with Britain. But the budget lacked a "seismic difference" for retailers and their local suppliers, he said, and the rates relief does not balance the last two years. Higher costs at his domestic suppliers forced him to drop some, including a mug maker in Stoke, and look abroad.
Source: The Guardian