Over 80 retailer CEOs, including CJ Lang’s Colin McClean, Scotmid’s Karen Scott and One-O-One Group Retail Director Paul Stirling, have written a joint letter to Chancellor of the Exchequer Rachel Reeves expressing their concerns over the Budget’s impact on inflation, employment and investment.
The letter, which was also signed by the heads of Spar UK, Asda, Morrisons, Sainsbury, Tesco, SGF and BRC, stated that “the sheer scale of new costs and the speed with which they occur create a cumulative burden that will make job losses inevitable, and higher prices a certainty”.
The industry leaders claimed that the impact of the Employers’ National Insurance Contribution (NIC) threshold change was particularly acute given retail employs large numbers of people in entry-level and part-time roles. They highlighted that costs from the Budget sit alongside other incoming regulations, including implementation of new packaging levies.
The 15% rate increase in Employers’ NIC equated to £0.57bn, while the threshold change would cost an extra £1.76bn, claimed the letter.
The National Living Wage increase would account for a further £2.73bn, while the Packaging Levy would add costs of £2bn.
The letter surmised that the total amount of new costs facing retailers came to an astounding £7.06bn.
“Retail is already one of the highest taxed business sectors, along with hospitality, paying 55% of profits in business taxes,” stated the letter. “Despite this, we are highly competitive, with margins of around 3-5%, ensuring great value for customers.
“For any retailer, large or small, it will not be possible to absorb such significant cost increases over such a short timescale. The effect will be to increase inflation, slow pay growth, cause shop closures, and reduce jobs, especially at the entry level. This will impact high streets and customers right across the country. We are already starting to take difficult decisions in our businesses and this will be true across the whole industry and our supply chain.”
The letter proposes a meeting to discuss retailers’ concerns and to work together on a solution, which would involve changing the timings of some of the changes to allow businesses time to adjust and “greatly mitigate their harmful effects on high streets and consumers”.
