Despite chancellor Jeremy Hunt hailing the autumn statement as the “biggest business tax cut in modern British history,” the response from the retail sector has been uncharacteristically direct.
Another autumn statement has come and gone and the chancellor has again failed to advance any meaningful reform on retail’s perennial bête noire: business rates.
While the government will hope workers are buoyed by the two-percentage-points cut in national insurance and an increase in the national living wage, the prospect of paying even more on wages, without any mitigating tax cuts for larger businesses, has left the sector seething.
“It is deeply disappointing that the chancellor has failed to address the unfairness of our business rates system and in doing so, has missed an opportunity to support retailers at a time of economic uncertainty,” thundered Currys chief executive Alex Baldock.
“Under the current system, retailers with stores, which provide millions of high-value jobs, will be hit with an additional £480m bill in April, while online-only businesses remain significantly under-taxed. The rates system is meant to reflect rental values but with rental values falling, it is unjustifiable for business rates to still be going up.
“If the government is serious about supporting businesses of all sizes, promoting growth and reducing costs for consumers, it must urgently address our outdated and unfair business rates system.”
“The chancellor has poured fuel on the fire spreading across our high streets with a tax hike on shops and other businesses”
Helen Dickinson, BRC
It’s a sentiment that British Retail Consortium chief executive Helen Dickinson shared.
She said: “Retailers and their customers have been sold out by the chancellor’s statement, which does not do enough to support shops, shoppers and an industry that employs over 3 million people and many more across its supply chains.
“As we enter the Christmas period, this autumn statement will serve only to renew inflationary pressures that ultimately harm households.”
While the government froze the business rates multiplier for small businesses and extended the 75% business rate discount on rates up to £110,000, no such cut was offered to larger businesses.
As a result, over 219,000 commercial premises are facing the prospect of paying an extra £1.66bn in business rates from April 2024 – a 6.7% increase in line with the September rate of inflation.
As a result of the latest scheduled increase, Selfridges is set to pay an extra £576,993 on its more than £8.6m business rates bill this year on its Oxford Street flagship, according to research by Altus Group.
“In his rush to save his job, the chancellor has ignored the calls of the BRC and UKHospitality and has forgotten that the larger companies are the main employers in these sectors”
John Webber, Colliers
“The chancellor has poured fuel on the fire spreading across our high streets with a tax hike on shops and other businesses,” Dickinson said.
“Rather than introduce the meaningful reforms that were promised in the government’s 2019 manifesto, the chancellor is now letting the tax spiral out of control, driving up costs just as retailers’ efforts to curb inflation have started to bear fruit”.
Investment management firm Colliers called Hunt’s failure to reform business rates “the final nail in the coffin for the high street”.
Colliers head of business rates John Webber said: “In his rush to save his job, the chancellor has ignored the calls of the BRC and UKHospitality and seems to have forgotten that the larger retailer and hospitality companies are the main employers in their sectors.”
He went on to say the autumn statement “will be a massive hit to the high street”, explaining that retail is still under huge economic strain with the “rise in the national living wage only adding to the pressure”.
While the cut to national insurance contributions from 12% to 10% will put some money back in people’s pockets, KPMG UK head of retail Paul Martin said: “It will do little to help the burden on lower-income families or reduce the high food inflation levels they are facing.”
“This is another missed opportunity by the chancellor”
Kay Buxton, Marble Arch London BID
On top of failing to address business rates and heaping further labour costs on many large retail businesses, the chancellor’s refusal to reintroduce tax-free shopping for tourists was blasted by the industry.
Chief executive of Marble Arch London BID Kay Buxton said tax-free shopping “would have led to an extra £2.1bn being spent on shopping by overseas visitors, as well as £1bn on hotels, restaurants and visitor attractions” in the district.
She added that the removal of tax-free shopping has “damaged the international appeal of the UK for visitors, so this is another missed opportunity by the chancellor”.
The only retailer to have expressed something positive about the autumn statement was Marks & Spencer, which welcomed the chancellor extending the scope of VAT zero-rate relief on women’s sanitary products to include reusable period underwear from January 1.
M&S director of corporate affairs Victoria McKenzie-Gould said: “This is a small change to the Treasury but will make a big difference to women across the country. We’re delighted that the chancellor has finished the job and levelled the playing field so that whatever period product someone chooses to use, it’s VAT free.”