Labour’s first Budget in 14 years or so was always going to make for interesting viewing. Watching it live on Budget Day, I can’t have been the only guy to find the way that Chancellor Rachel Reeves delivered it a little curious. It was peppered with smirks and snide comments and came across as fairly self-satisfied and smug. Not exactly the approach we’d been hoping for.
To be fair, not much of what she said though was particularly surprising. Most of it had been trailed beforehand. And, if you were being generous, you could broadly label it “well intentioned” but as is so often the case with politicians, having good intentions only gets you so far if you don’t have a very deep and thorough understanding of what you’re actually legislating or budgeting on.
Ask farmers or the hospitality trade if they feel Ms Reeves truly understands their sectors, for example.
But for retail it was largely as expected, if a little heavier handed than most of us had hoped for.
Having spoken to a load of retailers for this issue’s cover story, it looks broadly like the extra wage and NIC costs are going to add around £16k or so of cost for a typical smallish store. Depending on what margin you’re operating on, that means that most stores are going to have to find an extra £70k or £80k of sales just to stand still.
Bigger stores like Billy Gatt’s Premier in Whitehills are more likely to take a hit in the region of £25k. So he’s looking at having to make an additional £100k or more just to stop himself going backwards.
The inescapable conclusion is that something is going to have to give. It’s just not possible to carry on business as usual. Billy has already cut his store’s hours which could have a negative impact on trade in various ways. Craig Duncan in Falkirk says he can’t see any other way forward than raising prices or cutting staff hours.
It’s also impossible to see how the Budget won’t lead to job losses. For a Budget that was trumpeted as one that wouldn’t cost workers a penny, it has all the hallmarks of a Budget that’s going to cost workers a lot more than a penny – it could cost them their jobs.
That’s not to say any retailers have an in-principle problem with paying staff better wages. The problem lies more in how things were done. A hike in the minimum wage and a hike in employers’ NIC was a very crude and very blunt way of attempting to tackle a complex and delicate issue.
It has echoes of some SNP policies where business was treated with contempt, ignored, excluded from conversations and consultations then simply told to ‘deal with it’ after the latest bit of extremely ill-considered legislation was implemented.
Retailers will indeed deal with it, but this time around many – or most? – will have no choice but to deal with it by laying off staff. Not quite the goal the Chancellor was aiming for.
Antony Begley, Publishing Director, SLR
Something will have to give…
Labour’s first Budget in 14 years or so was always going to make for interesting viewing. Watching it live on Budget Day, I can’t have been the only guy to find the way that Chancellor Rachel Reeves delivered it a little curious. It was peppered with smirks and snide comments and came across as fairly self-satisfied and smug. Not exactly the approach we’d been hoping for.
To be fair, not much of what she said though was particularly surprising. Most of it had been trailed beforehand. And, if you were being generous, you could broadly label it “well intentioned” but as is so often the case with politicians, having good intentions only gets you so far if you don’t have a very deep and thorough understanding of what you’re actually legislating or budgeting on.
Ask farmers or the hospitality trade if they feel Ms Reeves truly understands their sectors, for example.
But for retail it was largely as expected, if a little heavier handed than most of us had hoped for.
Having spoken to a load of retailers for this issue’s cover story, it looks broadly like the extra wage and NIC costs are going to add around £16k or so of cost for a typical smallish store. Depending on what margin you’re operating on, that means that most stores are going to have to find an extra £70k or £80k of sales just to stand still.
Bigger stores like Billy Gatt’s Premier in Whitehills are more likely to take a hit in the region of £25k. So he’s looking at having to make an additional £100k or more just to stop himself going backwards.
The inescapable conclusion is that something is going to have to give. It’s just not possible to carry on business as usual. Billy has already cut his store’s hours which could have a negative impact on trade in various ways. Craig Duncan in Falkirk says he can’t see any other way forward than raising prices or cutting staff hours.
It’s also impossible to see how the Budget won’t lead to job losses. For a Budget that was trumpeted as one that wouldn’t cost workers a penny, it has all the hallmarks of a Budget that’s going to cost workers a lot more than a penny – it could cost them their jobs.
That’s not to say any retailers have an in-principle problem with paying staff better wages. The problem lies more in how things were done. A hike in the minimum wage and a hike in employers’ NIC was a very crude and very blunt way of attempting to tackle a complex and delicate issue.
It has echoes of some SNP policies where business was treated with contempt, ignored, excluded from conversations and consultations then simply told to ‘deal with it’ after the latest bit of extremely ill-considered legislation was implemented.
Retailers will indeed deal with it, but this time around many – or most? – will have no choice but to deal with it by laying off staff. Not quite the goal the Chancellor was aiming for.
Antony Begley, Publishing Director, SLR
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