The chief executive of the Association of Convenience Stores has written a letter to chancellor Rachel Reeves warning that the Budget has left many smaller retailers facing a “pretty bleak picture in 2025”.
In the letter, ACS boss James Lowman says that measures in the Budget will add over £666m worth of added costs to the convenience sector in 2025.
These added measures include a reduction in business rates relief from 75% to 40%, a reduction in the employer National Insurance Contributions (NICs) threshold from £175 a week to around £96 a week, an increase in the rate of employer NICs from 13.8% to 15%, and an increase in the rates of the National Living Wage – the headline rate of which will reach £12.21 per hour in April.
Lowman writes that “while some of the smallest businesses will be protected from the employer NICs changes through an increase in the Employment Allowance to £10,500” the majority of convenience stores will face “significant operating cost increases in the new year”.
ACS chief executive James Lowman said: “Thousands of retailers are looking at a pretty bleak picture in 2025. These are already challenging times for convenience stores in an extremely competitive market, but the additional costs that many are facing in increased business rates and wage bills cannot just be absorbed. It’s important that the government understands that while it makes difficult decisions on taxation and public finances, retailers will be forced to make their own difficult decisions on investment, staff hours and the price of products in store.”
The letter references ACS survey data, which shows that 24% of small convenience stores will likely close their doors without further business rates relief, and 30% of small businesses saying the increase in staffing costs are their top policy concerns next year.
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