The Spring Statement has brought little relief for retailers, with no significant change to the major tax plans announced in the October budget.
Chancellor of the Exchequer, Rachel Reeves, highlighted the government’s aim to promote business investment, but the Association of Convenience Stores (ACS) has warned that the UK Government’s tax increases on retailers is at odds with this goal.
ACS chief executive James Lowman said: “The Chancellor again stated today that promoting business investment is central to her strategy. She needs to look carefully at how increases in employment costs and business rates are in fact making it harder for businesses to invest, because at the moment our members are cutting back wherever they can to cover the additional costs hitting their businesses from next week.”
Figures from the latest Voice of Local Shops survey of over 1,000 convenience store retailers across the UK have shown that there has been a sharp decline in net staff hours in the sector – the third lowest on record since the start of the survey in 2012.
Mr Lowman continued: “As the cost of employing colleagues rises, local shop operators are already reducing staff hours in their stores. For many businesses, there are no further staffing cuts to be made. We will see store closures and with them the loss of essential local services unless the government provides more help through investment incentives, mitigations against growing employment costs and more business rate relief.”
The eye watering increases to employer National Insurance contributions (NIC) announced in the UK Budget, in addition to the National Living Wage (NLW) rise, could cost Scotland’s local retailers tens of millions that they can ill afford, the Scottish Grocers’ Federation (SGF) has warned.
The Federation of Independent Retailers (The Fed) accused the government of failing to take retailers’ concerns on board.
National President Mo Razzaq said: “The Fed is greatly concerned about impending higher costs from increases in employer national insurance contributions and above-inflation increases in the National Living Wage due in the coming days when the new financial year starts in April.
“Higher government costs come at a time when the overall economic outlook looks challenging, with growth under-performing, inflation ticking up and government spending being taken away from the economy.
“Our members are key to the government’s growth agenda, which is the right goal, but this can only be achieved if we are able to afford to employ staff and help them learn and develop.”
The Scottish Grocers’ Federation highlighted the following announcements from the Spring Statement as areas of interest to the sector:
- An additional £28m will be allocated to the Scottish Government in 2025-26 through the operation of the Barnett formula. The Scottish Government’s block grant funding from 2026-27 onwards will be confirmed at Phase 2 of the Spending Review, which concludes on 11 June 2025.
- Predicted growth has been downgraded from 2% to 1% for this year by the Office for Budget Responsibility (OBR), but it has been upgraded for the next four years.
- Consumer Price Inflation (CPI) predicted to hit 2% target by 2027, but it is forecast to average 3.2% this year.
- The government plans to invest in employment, health, and skills support from 2026-27, with funding increasing to £1bn annually by 2029-30, to assist individuals in entering or remaining in the workforce and reducing long-term economic inactivity.
- £1bn will be provided for the British Business Bank to enhance access to finance for smaller businesses through Start Up Loans and other schemes.
- Reduction of UK Government departmental admin budgets by 15% by the end of the decade.
- HMRC is expanding counter-fraud capability to increase the number of annual charging decisions for the most harmful fraud by 20%. Criminal investigations will focus on delivering a strong deterrent. This will include tackling those who undermine legitimate trade and small business.
