Chancellor Jeremy Hunt has failed to put in place meaningful support for the almost 7,000 local shops facing closure this year as a result of sky-high energy costs, according to the sector’s trade associations.
From April, the government will press on with “untargeted, inadequate” support for 12 months through the Energy Bills Discount Scheme, with a discount of 1.9p per kWh for electricity. This will reduce an average eligible convenience store’s energy bill by around £1,520 for the year. Convenience stores that signed fixed contracts during the height of wholesale prices (Q3/Q4 2022) are those most likely to be at risk of closure, due to the tripling or in some cases quadrupling of their energy bills for the duration of the fixed term contract. There are up to 6,900 stores facing rates of 80-90p per kWh and above this year.
ACS Chief Executive, James Lowman, said: “A Budget focused on growth and investment will come as no comfort to those who will have their entire profit margins wiped out this year by excessive fixed energy contracts. Convenience stores have been left out in the cold by the Chancellor, being left to face crippling energy bills by themselves and putting thousands at risk.
“Difficult decisions will have to be made in the coming months by independent retailers about the future of their businesses, which will have a negative impact on investment and reduce the number of available jobs in communities, all while bolstering the profits of energy companies.”
The NFRN’s National President Jason Birks added: “I and other trade associations wrote to the chancellor and the business secretary just last month imploring them to provide the necessary help for struggling small businesses.
“It is, therefore, extremely disappointing that our calls for assistance have not been answered.”
Other announcements included in the Budget include:
- Fuel duty will be frozen for 12 months.
- Alcohol and tobacco duties will rise by the rate of RPI as planned, with the exception of draught relief in pubs.
- Full capital expensing will be introduced for the next three years, with every £ a company invests in IT equipment, plant and machinery being eligible to be deducted from taxable profits.
- The government will offer ‘Returnerships’ targeted at the over 50s who want to return to work.
- Childcare reforms to make it easier for parents to return to the workplace.
Birks said the tax rises on alcohol and tobacco will also lead to an increase in illicit trading, which again is harmful to honest shopkeepers and fuels organised crime.
He added: “The chancellor has shown a complete disregard for shops that are the lifeblood of their local communities. I make no bones about it – we will see many forced to close their doors for good as businesses become unviable in the current economic climate.”
Gordon Balmer, Executive Director of the Petrol Retailers Association, said: “Petrol and diesel prices are still extremely volatile due to the ongoing war in Ukraine. Many motorists will breathe a sigh of relief at the Chancellor’s decision to extend the fuel duty freeze and maintain the 5ppl cut.
“We welcome the government’s commitment to keep fuel duty rates under review and hope that they will continue to do all they can to ease the burden of high energy prices on motorists.”
Helen Dickinson, Chief Executive of the British Retail Consortium, added: “In the face of volatile demand caused by high inflation and low consumer confidence, measures to support households with the cost of living, such as the ongoing energy bill support and changes to childcare costs, are welcomed.
“However, many businesses are weighed down by a myriad of higher costs right through the supply chain. Government must do more to limit one of the biggest drags to retail investment, which is oncoming regulatory burdens heading down the track, or risk a crash in business investment and further inflationary pressures.”
The chancellor has also announced an additional £320m funding for the Scottish government, up to £8.6m of targeted funding for the Edinburgh Festivals, and £1.5m to repair the Cloddach Bridge.
Hunt also told the House of Commons that inflation is forecast to fall from 10.7% last year to 2.9% by the end of this year and the economy is forecast to grow by 1.8% in 2024 and 2.5% in 2025, according to Office for Budget Responsibility forecasts.
