Budget 2024: Local shops to face significant new pressure

Local shops will face significant new pressures as a result of the Budget, the Association of Convenience Stores (ACS) has warned.

Chancellor Rachel Reeves' budget's impact will be felt unevenly across the UK’s 50,000 convenience stores, with some measures such as business rate relief and the increased employment allowance mitigating costs for smaller independent stores, while providing no help for chains and larger independent businesses.

The key measures for local shops announced by the Chancellor, and the costs for local shops associated with them, are:

• National Living Wage to increase to £12.21 per hour
• National Minimum Wage (18-20 rate) to increase to £10 per hour
• Cost to the convenience sector next year: £7.739bn (increase of £513m)
• Employers’ National Insurance Contributions to rise to 15 per cent
• Threshold for Employers’ National Insurance contributions to fall to £5,000 per year
• Employment Allowance to rise to £10,500 a year
• Cost to the convenience sector next year: £397m (increase of £85m)
• Retail and hospitality rate relief reduced from 75 per cent to 40 per cent
• Small business multiplier frozen for 2025/26
• Cost to the convenience sector: £267m (increase of £68m)
• Total cost of main announcements (year-on-year difference): £666m

ACS Chief Executive James Lowman said: “The cold hard facts are that the measures announced in the past 24 hours have added two-thirds of a billion pounds to the direct cost base of the UK’s local shops. At a time when trade is tough and operating costs are stubbornly high, this will be challenging for our members to absorb and there will be some casualties on high streets and in villages and estates across the country.

“Not all shops will be impacted the same. The smallest retailers, with low NICs bills and lower rateable values for their shops, will benefit from the welcome increase in the employment allowance and the retention of 40% of the retail, hospitality and leisure business rates relief. Retailers with a larger store, a number of sites or those operating a chain will receive limited benefit from these mitigations, and this will impact their ability to invest and to continue to offer services in the communities they serve.

The following additional measures were announced by the Chancellor in the Budget speech today:

• Flat rate levy on vaping liquids from October 2026 of £2.20 per 10ml
• Fuel duty frozen and the 5p cut extended for another year
• A new commitment to tackling shop theft and funding directed to tackling organised gangs

Lowman continued: “The Chancellor’s commitment to tackling shop theft will be warmly welcomed by our members, but they are interested only in action and in crime against their stores and their colleagues being tackled effectively. We stand ready to help implement a new, and better-funded strategy to stop shop theft, abuse and violence against our members.”