Greetings industry blasts budget

Labour’s tax raid condemned as ‘anti-High Street’ and ‘betrayal’ of indie retailers

 

The greeting card industry has blasted the Autumn Budget unveiled yesterday, 30 October, as anti-High Street and anti-small businesses short-term extreme measures after the first Labour Chancellor for 14 years unveiled a £40billion tax raid.

While some aspects, such as the move to tackle the surging level of shoplifting, were welcome, the hike in employers’ national insurance contributions and reduction in the level at which it kicks in, minimum wage increases, and delay in the retail business rates overhaul all came under fire.

Above: Chancellor Rachel Reeves appeared on the BBC today to defend her measures
Above: Chancellor Rachel Reeves appeared on the BBC today to defend her measures

And chancellor Rachel Reeves’ defence today on the BBC, which can be seen here, where she claims £25bn will be raised by the NI increases, has already been shot down by the Institute For Fiscal Studies think tank which says businesses will scale back wage rises: “It will result in lower wages, reducing the amount raised from employer NI and reducing employee NI and income tax revenues. That takes the net revenue down to some £16bn.”

British Independent Retailer Association CEO Andrew 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.”

Indie retailer David Robertson, who runs the family business Pozzi in Buckie, pulled no punches in his assessment: “For me a budget should be about give and take. There should of course be some things that challenge us but, overall, we should feel positive it is not going to seriously affect our business.

“Sadly, this budget leaves me with little to be enthusiastic about and a real worry about where we find the money to pay all these increases. To me this feels very much like an anti-High Street and anti-small business budget – quite simply we are left with little positives to cling to.

Above: David Robertson is not impressed by the budget
Above: David Robertson is not impressed by the budget

“In terms of business rates, in Scotland we’ve had not had any discount from the Scottish government anyway so the fact that England continues to get a discount even at 40% is without doubt an unfair, uneven playing field.

“The rise in NI and the drop in threshold alongside another larger increase in minimum wage are three real body blows which will hurt us greatly. It’s a 15% increase in two years to the minimum wage rate and I don’t see the government giving this to any of the doctors or teachers.

“They say that they want to support small business but this is nothing more than lip service as they neither understand nor care about the working man who incidentally owns or has built a small business.

“These measures will force many businesses to make difficult decisions about staff, hours and indeed if they want to continue. I know personally I need to look at everything very carefully and have started to do so.”

GCA CEO Amanda Fergusson only recently signed the Independent Retailers’ Confederation (IRC) letter to chancellor Rachel Reeves begging for the small business rate relief and the 75% retail, hospitality and leisure rate relief levels to be kept, but the retail discount is to be cut to 40% from April.

She said: “The increase in employers’ NI to 15% from April 2025, and the reduction £9,100 to £5,000 in the threshold at which businesses start paying NI on an employee’s earnings will have a huge impact on business owners across the country.

Above: The GCA’s Amanda Fergusson signed the IRC letter begging the chancellor to keep rate reliefs
Above: The GCA’s Amanda Fergusson signed the IRC letter begging the chancellor to keep rate reliefs

“It is also really disappointing to see the reduction in the business rates cap, from 75% discount to 40% (capped at £110,000), as this cap has been a lifeline for small businesses across the country.

“The GCA joined with colleagues at the IRC and wrote to the chancellor last month highlighting the importance of this cap particularly to independent retailers. With over 80% of greeting card sales in bricks and mortar stores, thriving High Streets are vital for our industry and communities across the country.”

David Byk, CEO of Ling Design, GBCC, and Penny Kennedy, added: “I’m really disappointed in the short-term view the Chancellor has taken and the damage this will wreak on businesses up and down the country.

“Over-inflationary increases on national insurance and minimum wage pushes up the cost of employment and makes it harder for us to employ people. In addition, all this is inflationary and we can see that interest rates are now forecast to come down at a slower level plus more people being dragged into tax brackets which reduces the disposable spend of consumers.

“All this creates further detrimental effects on our economy and especially on sales of discretionary items such as cards and gifts.

Above: The budget was broadcast live yesterday
Above: The budget was broadcast live yesterday

“The UK tax rate is set to take on a historic high, and real disposable income per person is forecast to fall which is not what the working people, however Labour attempts to define us, expected when voting them in.

“I understand the need to raise more money through taxes but these short-term extreme measures which they say could not be prevented are bad for business, commerce and, as a result, the country as a whole.”

And Jerry Brown, who co-owns First Class Greetings & Post Office in Hadleigh and has been heavily involved in helping with the aftermath of the Post Office Horizon IT scandal, pointed out the £1.8bn allocation for postmaster compensation mentioned in the budget “isn’t really new”.

He commented: “We know minimum and living wage going up to £12.20ph and a huge increase in employers’ NI will have a severe impact on profitability and viability of independent small businesses.

“The government also seems to be struggling on their definition of working people – small business owners don’t seem to be part of their definition despite the fact that we all work very long hours often for very little reward. Many small business owners are often paying their staff more than they earn themselves.”

BIRA condemned chancellor Rachel Reeves’ announcement as “as the most damaging for independent retailers in recent memory,” saying it had a triple blow of doubled business rates, increased National Insurance, and higher minimum wage costs “threatening widespread High Street closures”.

Above: BIRA’s Andrew Goodacre called it the “worst budget” for indie retailers
Above: BIRA’s Andrew Goodacre called it the “worst budget” for indie retailers

Andrew added said: “This is without doubt the worst budget for independent retailers I have seen in my time representing the sector – the government’s actions 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 NI 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.

“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 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.”

The only praise came from the British Retailers’ Consortium, where CEO Helen Dickinson welcomed the move to provide additional funding to help police tackle shoplifting and organised retail crime – although she also pointed out that the rising costs will harm investment.

Above: The Houses Of Parliament where the £40bn tax raid was unveiled
Above: The Houses Of Parliament where the £40bn tax raid was unveiled

Announcing an increase in the core government grant for police forces under the departmental pay settlement to support frontline policing and deliver 13,000 additional PCSOs to tackle neighbourhood policing, the chancellor said she had listened to the BRC.

Helen said: “We welcome the Chancellor’s firm stance on shoplifting, with the announcement on extra funding aimed at tackling a scourge that costs the industry over £1.8bn. This is on top of the scrapping of the low-level shoplifting threshold, which has resulted in many police forces ignoring smaller crimes. Working closely with the police and government, retailers are determined to tackle retail crime – from shoplifting, to violence against retail workers.”

But, on the business rates issue, she added: “As the industry prepares for over £2.5bn in new costs in 2025, improvements to the business rates system will not come until 2026.

“We welcome the recognition that retail, along with hospitality businesses, should pay lower rates but, with the detail still to be worked through, it’s unclear whether this will address an imbalance which sees retail, as 5% of the economy, pay 21% of the total business rates bill. In order to stimulate investment, it is vital these changes reduce the overall costs on the industry, rather than simply shifting the burden from one part to another.”

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