Chancellor Jeremy Hunt has revealed that there will be an increase in the National Living Wage from the current level of £9.50 an hour for over-23s to £10.42 from April.
SGF chief executive Pete Cheema said: “The hike to the National Living Wage from April 2023 represents almost a double-digit increase and will hit retailers hard particularly as wage costs are a large proportion of shop costs. This in turn will jeopardise profitability, employment sustainability and ultimately business survival.
“This comes at a time when convenience retailing businesses are being confronted with an exceptionally challenging trading environment which is characterised by the industry being exposed to soaring energy costs, rising inflation, and rising interest rates and a cost of living crisis. On top of this the smooth flows that produce efficient and effective supply chains are broken introducing further costs and disruption. While there are no easy answers, this latest increase to the National Living Wage will potentially prove a step too far for many retailers.”
In addition, the state pensions and benefits will rise with inflation with an increase of 10.1%, meaning 10 million working-age families will see a much-needed increase next year.
The Chancellor also announced that the energy cap will be raised to £3,000 in April, from £2,500 now.
The NFRN has branded the government’s decision to raise the energy cap without guaranteed support past April as a “terrifying prospect” and may result in the closures of small, independent stores across the country.
NFRN National President Jason Birks said: “It is essential that small business is supported and helped through this time of crisis. Lack of support is unthinkable and the added expense to an already squeezed budget could just mean the end for many businesses. This is unimaginable and the government must act now to ensure that this doesn’t happen.”
James Lowman, Chief Executive of the Association of Convenience Stores, added: “Increases in energy bills are the single biggest concern facing retailers at the moment. We need clarity as soon as possible on what the government intends to do to ensure that convenience stores can keep serving their communities in the new year. Without support on this crucial issue, stores will be facing extremely difficult decisions in the new year.”
In addition, the Chancellor announced that electric vehicles will no longer be exempt from Vehicle Excise Duty from April 2025 to make the motoring tax system “fairer”. Half of cars are predicted to be electric by that point, Hunt said, adding that company car tax rates would remain lower for electric cars.
RAC head of policy Nicholas Lyes said: “After many years of paying no car tax at all, it’s probably fair the government gets owners of electric vehicles to start contributing to the upkeep of major roads from 2025.
“Vehicle excise duty rates are unlikely to be a defining reason for vehicle choice, so we don’t expect this tax change to have much of an effect on dampening the demand for electric vehicles given the many other cost benefits of running one. The fact that company car tax increases on EVs will be kept low should also keep giving fleets the confidence to go electric which is vital for increasing the overall number of EVs on our roads.”
Meanwhile, a decision on alcohol duty rates was deferred until next year.
Mark Kent, Chief Executive of the Scotch Whisky Association, said: “Over the next few months, we look forward to working with the Chancellor who was true to his word and listened to the industry over the past month as we made the case for reinstatement of the duty freeze.
“Previous freezes have consistently delivered more revenue for the Exchequer, and have enabled the industry to invest in our supply chain, create jobs, support hospitality – boosting the UK economy.”
