Chancellor Jeremy Hunt delivered his highly anticipated Autumn Statement at the House of Commons yesterday, and has since been met with a mixed bag of reactions from the retail industry, much of which was expecting much more in the way of assistance.
Among the new measures, Hunt announced that business rates would be frozen for smaller businesses for a year, while retail, hospitality and leisure companies were to see an extended 75 percent discount of up to 110,000 pounds for an additional year.
Hunt said that such measures have saved the average independent shop over 20,000 pounds, however it is “not possible to continue with temporary support measures forever”. In addition to this, Hunt did note that high-value properties were to see their standard multiplier rates rise in line with inflation by 6.7 percent, however the multiplier for small businesses was to be frozen for an additional year.
The announcement was met with disappointment from Helen Dickinson, chief executive of the British Retail Consortium (BRC), who said that retailers and customers had been “sold out” by the statement, which would only “renew inflationary pressures”.
‘Flawed tax’ plan comes amid lowest retail sales volumes
She continued: “The chancellor has poured fuel on the fire spreading across our high streets with a tax hike on shops and other businesses. His decision to increase the business rates standard multiplier will cost retailers hundreds of millions every year.”
Dickinson went on to note that the “flawed tax” comes as retail sales volumes hit their lowest in two years, despite business rates needing to be paid in full prior to the sale of a product or service. The BRC boss did welcome the retail, hospitality and leisure relief for the Small Business Multiplier, calling it a “gesture of support to high streets”.
Hunt faced further criticism from the president of property tax at Altus Group, Alex Probyn, who accused the chancellor of “giving with one hand and taking with another”. Probyn said the increase in business rates for non-domestic properties “could be clawed back through full expensing if companies choose to invest”. However, the firm’s clients reportedly noted that business rates are a “disincentive to invest”.
Similar uncertainty was expressed by Scott Parsons, chief operating officer UK at Unibail-Rodamco-Westfield, who called the chancellor’s “lack of impactful reform” disappointing. He added: “The industry is screaming out for permanent reductions to occupancy taxes, which still stand at up to ten times more than other European countries, putting the UK at a huge competitive disadvantage. On top of this, it’s a blow for the industry to see no moves towards an online sales tax to level the playing field between online and physical retailers, or reinstating tax-free shopping for international visitors to fuel tourist demand, boost consumer spend and support economic growth.”
National Living Wage sees ‘biggest increase ever’
Uncertainty was also seen in the response from the Federation of Independent Retailers (the Fed), whose national president, Muntazir Dipoti, said that while the organisation was pleased with the business rates results, its members were still struggling with “extortionate energy bills”. In a statement, Dipoti added: “Our costs are rising all the time, and when you factor in the increase in the minimum wage to 11.44 pounds an hour, some small shops will inevitably have to consider whether their businesses are viable and sustainable.”
The new minimum wage was hailed as a success by the chancellor, however, who said this was the “biggest ever increase” to the National Living Wage, with a raise of over a pound an hour to come in from April. Hunt noted that the increase was to be worth over 1,800 pounds a year for a full-time worker, at an almost 10 percent boost from 10.42 to 11.44 pounds.
Eligibility for the living wage is to also be extended by reducing the age threshold to 21-years-old, with those in this age group to get a 12.4 percent increase worth almost 2,300 pounds a year for the full-time worker. Those in the 18 to 20 year old range, meanwhile, will get a 1.11 pounds hourly pay raise.