Retailers' bodies have reacted sharply to Chancellor Jeremey Hunt's spring budget announced today (6), saying government inaction on business rates will now cost the retail industry £470 million extra every year.
The British Independent Retailers Association (BIRA) has said it is optimistic about the spring budget where the Chancellor announced the reduction of National Insurance rates though business rates continue to remain a concern for the retail sector.
Bira, who work with over 6,000 independent businesses of all sizes across the UK, said the news from Jeremy Hunt that NI rates would be reduced could offer a "glimmer of hope" for struggling retailers who are desperate for consumer confidence to return to the high street.
The Chancellor has announced a significant cut in the main rate of class 1 National Insurance, reducing it to 8 per cent from April 6 2024. This follows a prior cut from 12 per cent to 10 per cent in January. Additionally, the class 4 self-employed NICs rate will be reduced from 9 per cent to 6 per cent, along with the abolition of class 2 self-employed NICs.
The Treasury estimates substantial savings for individuals, with an average worker on £35,400 saving more than £900 annually. The average teacher on £44,300 is expected to gain £1,250 per year. For example, those earning £20,000 will benefit from a £148.60 yearly saving, while those earning £50,000 will save £748.60. The average self-employed individual earning £28,000 is anticipated to save about £650 annually as a result of the NI rate cuts.
Andrew Goodacre, CEO of Bira, said, "We welcome the Chancellor's decision to reduce National Insurance rates, providing consumers with additional disposable income. We hope that this financial relief will boost consumer confidence, enabling them to spend more on the high streets.
"However, while we acknowledge the positive impact of the NI rate cuts on consumer spending, there is a missed opportunity in not addressing the planned 7 per cent increase in business rates, which remains a concern for the retail sector."
"We remain cautious about long-term economic growth, and there is the need for initiatives that drive employment and production. The association believes that sustained economic growth is crucial for the growth of businesses, and more measures are needed to support this aspect," he added.
Presenting his 2024 spring budget, Hunt announced that £230 million will be rolled out for time and money saving technology which speeds up police response time by allowing people to report crimes by video call and where appropriate use drones as first responders.
Muntazir Dipoti, the National President of the Federation of Independent Retailers (the Fed), said, “Shoplifting and attacks on shop staff are at epidemic levels. According to latest figures, they have risen from 876 a day to a staggering 1,300 every day but we believe the true picture could be even greater because of the lack of faith in police response times.
“The news that more funds are being made available to make it easier to report crimes and to speed up police responses is, therefore, welcome.”
Other positives for independent retailers from today’s budget included the 2p cut in national insurance, a 2 per cent reduction in self-employed NICS, freezes on alcohol and fuel duty, the VAT threshold increasing from £85,000 to £90,000 and an extension to the Covid-era government loan scheme until March 2026, Mr Dipoti added.
However, he said that Fed members were dismayed by the announcement of the vape tax, from October 2026 and following a public consultation, to discourage non-smokers from taking up vaping and a one-off increase in tobacco duty to maintain “the financial incentive to choose vaping over smoking.”
Dipoti warned that a vape levy would fuel the illicit market, “where there is no compliance to tobacco and vaping laws and where the products being peddled are likely to contain dangerous and illegal levels of toxic chemicals.”
Cigarettes were a valuable commodity, he said, adding that increasing the price of cigarettes would heighten the risk of theft and retail crime.
British Retail Consortium (BRC) however has reacted more sharply, saying today’s budget will do nothing to deliver a better future for retailers and their customers.
Responding to the Chancellor’s Spring Budget, Helen Dickinson, Chief Executive of the British Retail Consortium, said, “When shops we love shut down, when jobs we need are absent, and when investment we benefit from is lost, it’s our lives and our communities which lose out. Retail employs three million people and invests over £17bn annually, yet the industry’s ambition to deliver a net zero, digitally transformed future with higher skilled, better paid jobs means its potential goes so much further. It seems the Chancellor does not share in our ambition, and today’s Budget will do nothing to deliver a better future for retailers and their customers.
“The cost of living crisis has taken a toll on businesses and households. Consumer confidence remains low and retail sales volumes in 2023 were the lowest in four years. Yet the Chancellor has done little to promote growth and investment, instead hindering it with the business rates rise in April. This has consequences for jobs and local communities everywhere – from the smallest villages to the biggest cities.
“The cut to national insurance might go some way to supporting households impacted by the high cost of living. However, unless Government addresses the government imposed cost increases, we may yet see the spectre of higher inflation return, limiting the benefits to households of lower national insurance.”
Government inaction will now cost the retail industry £470m extra every year in business rates – money that could have been better spent improving town and city centres, investing in lower prices, and maintaining jobs and commerce all over the UK, BRC stated.
"How can a whopping 6.7 per cent tax rise in April be justified, when the Chancellor himself is saying inflation is forecast to be nearer 2 per cent!"
“This rise in rates does not exist in a vacuum – retailers are also contending with cost pressures throughout the supply chain, in the context of the largest increase to the National Living Wage on record.
“Government has had five years to fix the problems with business rates, as they promised in their election manifesto. Retailers pay over £7 billion a year in business rates – over 22% of the total raised by the tax. This is disproportionate, destructive, and any Government that is serious about growing the economy must address this as a matter of urgency.
“Many people are still feeling the impact of the high costs of living, and measures to cut national insurance, as well as alcohol and fuel duties, will go some way to helping support households during this challenging time. Putting more money into people’s pockets is the first step towards bolstering the UK’s weak consumer confidence and spending.
BRC also called on the government to introduce a new standalone offence for assaulting or abusing a retail worker.
“The Chancellor noted that burglaries and violent crime had halved. This simply doesn’t tally with the experience of thousands of those working in retail. The number of incidents of violence and abuse rose to 1,300 per day in 2022/23 from 870 the year before. No one should have to go to work fearing for their safety. The Protection of Workers Act in Scotland already provides additional protection to retail workers, so why should our hardworking colleagues south of the border be offered less protection?"
