Government told of staff cuts, store closures and price rises following the budget
Some of the UK’s largest retailers have joined indies in slamming the government for its recent budget which piled increased costs on employers.
More than 70 businesses, including Tesco, Sainsbury’s, Next, Amazon and Boots have signed a letter organised by the British Retail Consortium to Chancellor Rachel Reeves warning that retail jobs will be lost, stores will shut, and prices will have to rise due to the hikes.
The October budget saw the rate of employers’ national insurance by 1.2% to 15% from April, and the level where employers begin paying on each staff member’s salary lowered from £9,100 a year to £5,000.
The letter comes after Tesco estimated it faces paying £1bn extra NI, while Asda chair Lord Stuart Rose revealed the £100m the retailer faces was “not an easy swallow”, and it says the measures, which include raising the national minimum wage, and new levies on packaging, could raise the sector’s costs by up to £70billion per year.
And The Entertainer is another retailer which has spoken openly about how it has cut some of its shop opening plans due to the increased costs imposed by the budget.
Greeting card retailers have already blasted the budget with David Robertson, who runs the family business JP Pozzi in Buckie and Elgin, pulling no punches in his assessment: “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.
“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.”
And, agreeing with the big retailers’ assessment, he added: “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.”
The BRC letter states: “For any retailer, large or small, it will not be possible to absorb such significant cost increases over such a short timescale. The effect will be to increase inflation, slow pay growth, cause shop closures and reduce jobs, especially at the entry level.
“This will impact High Streets and customers right across the country. We are already starting to take difficult decisions in our businesses and this will be true across the whole industry and our supply chain.”
“We appreciate government’s focus on improving the fiscal situation and investing in public services; we also recognise the role businesses have in supporting this but the sheer scale of new costs and the speed with which they occur create a cumulative burden that will make job losses inevitable, and higher prices a certainty.”
A Treasury spokesman said: “With our public services crumbling and an inherited £22bn fiscal black hole from the previous government, we had to make difficult choices to fix the foundations of the country and restore desperately-needed economic stability to allow businesses to thrive.
“By doing this, more than half of employers will either see a cut or no change in their national insurance bills, there will be £22.6bn more for the NHS and workers’ payslips will be protected from higher tax.”
The latest survey being carried out by the Independent Retailers’ Confederation, of which the GCA is a member, is looking for cardies opinions to be able to feedback to the government.
The deadline for the quarterly Heartbeat survey, which covers Q3 2024, is Friday, 22 November, and
question nine says: “Thinking about the budget announcements relating to national insurance, national minimum wage and business rates relief, please score how comfortable they will be for your business to accommodate,” giving choices of very difficult, quite difficult, neutral, quite easy and very easy.
There’s a chance to expand on those answers, and respondents are also asked if they’re making any changes to their business plans because of the budget announcements.
