Government is "missing the mark" when it comes to understanding the struggles faced by small business owners, a convenience store owner has said, adding that Chancellor Rachel Reeves' budget has left many small, family-run businesses feeling overlooked.
Retailer Benedict Selvaratnam, who runs his family business Freshfields Market in Croydon, is "disappointed" by the recent budget announcement. He feels that the bigger-than-expected increase in wage cost, rise in Employer National Insurance Contributions and reduction in business rates relief will significantly raise the business operating costsAmong the key measures announced by Reeves that directly impact local stores are an increase in National Living Wage to £12.21 per hour and increase in National Minimum Wage (18-20 rate) to £10 per hour. The two are collectively expected to cost £513 million extra to the convenience sector next year, according to convenience store body Association of Convenience Stores (ACS).
Additionally, Employers’ National Insurance Contributions will rise by 15 per cent, the threshold for Employers’ National Insurance contributions to fall to £5,000 per year and Employment Allowance to rise to £10,500 a year. The collective cost to the convenience sector next year is estimated by ACS at £397m (increase of £85m).
Expressing his concerns, Selvaratnam told Asian Trader, "As a small, independent family business, Freshfields Market already operates on tight margins to keep our prices competitive for the local community. The increase in Employer National Insurance Contributions and reduction in business rates relief will significantly raise our operating costs.
"These changes come at a time when small businesses are still trying to recover from economic challenges, and it could hinder our ability to invest in growth, hire more staff, or even maintain our current workforce. It feels like a step backward for small businesses that are vital to our high streets."
Selvaratnam finds some relief in the shoplifting measures announced in the budget though he stresses on the need of proper enforcement as well.
He said, "The measures proposed to tackle shoplifting are a positive move and much needed. Shoplifting has become a major issue for retailers, especially in communities where economic pressures are high. Abolishing the £200 threshold and enforcing stricter penalties sends a strong message that theft won’t be tolerated.
"However, for these measures to be effective, enforcement needs to be consistent and supported by local law enforcement. It’s a step in the right direction, but we need ongoing support to ensure our staff and customers feel safe and protected."
"While the shoplifting measures are encouraging, the increased financial burden placed on small businesses outweighs the positives. It feels like the government is missing the mark when it comes to understanding the struggles faced by SMEs. We need policies that support growth and sustainability, not measures that add pressure to already strained resources.
"This budget has left many small, family-run businesses feeling overlooked."
Earlier, retailers' body British Independent Retailers Association (BIRA) too strongly criticised Reeves’ budget, calling it the “most damaging for independent retailers in recent memory”, with a triple blow of doubled business rates, increased National Insurance, and higher minimum wage costs threatening widespread high street closures.
Andrew Goodacre, CEO of Bira, said, "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 per cent to 40 per cent, while they're hit simultaneously with employer National Insurance rising to 15 per cent 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."
Goodacre added, "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."
