While the dust has settled on the chancellor’s autumn statement, the frustration felt by many retailers has not, says BRC boss Helen Dickinson
The chancellor made a calculated pre-election gambit, unveiling giveaways including cuts to National Insurance, an increase to the National Living Wage, protection of the pensions triple lock and support for low-income families.
For businesses, full expensing of investment in qualifying plant and machinery was made permanent and there were announcements on planning and support for creative industries, life sciences and advanced manufacturing.
But not all industries got a share of the chancellor’s spoils. Despite extending the small property and retail and hospitality discounts, which are capped, the retail industry was largely sold out by the chancellor.
Calls for a business rates freeze were heard but ignored, and much of the industry faces a 6.7% rise from next April.
“The autumn statement was a list of missed opportunities for an industry that employs more than 3 million people, and 3 million more in supply chains”
The increase in the National Living Wage was at the top end of what most retailers can swallow and there was little else in the statement to mitigate the rising costs it created.
The autumn statement was a list of missed opportunities for an industry that employs more than 3 million people, and almost 3 million more in its supply chains.
It was a missed opportunity to address inflation – the first of Rishi Sunak’s five priorities for 2023 – which may not fall as fast as some commentators have predicted. With the business rates burden rising again, the chancellor has piled further cost pressures onto retailers, just as they were starting to bring prices down.
It was a missed opportunity to stimulate retail investment and help grow the economy. Full expensing of investment costs is great but not if it doesn’t cover the biggest investments retailers are making, such as those into our digital future, rather than only plant and machinery.
And it was a missed opportunity to support upskilling of retail jobs and improve productivity. Retail jobs have become higher-skilled, and retailers need to train and upskill colleagues for these roles, but the Apprenticeship Levy doesn’t meet their needs.
More than £200m of potential retail investment in the labour market has gone to waste over the past 12 months because the system is too inflexible.
“The chancellor chose to take for granted the majority of retail businesses that provide the bulk of the jobs, investment and contribution to growth”
The autumn statement failed to deliver the reforms that we need, despite a commitment made by the current prime minister when he was chancellor.
Despite extensive collective effort across the industry, the chancellor chose to take for granted the majority of retail businesses that provide the bulk of the jobs, investment and contribution to growth.
Why were we ignored on business rates this year? It was a combination of significant savings from previous years’ rates freezes and 2022’s reform to transitional relief; the fact that the chancellor could still announce support for high streets via the small business rates reliefs without foregoing wider rates income; and government having declared its inflation target met and being less concerned about the industry’s message that a rates increase would push up prices.
Overall, in Jeremy Hunt’s view, any political downside of increasing rates by the full amount could be mitigated and outweighed by the upside of other measures he announced.
It’s the question of whether retail is taken for granted that I’ve been contemplating. I don’t think it’s binary in the sense that they like this industry or don’t like that one.
I believe the government sees retail as an industry that is resilient and capable, but not worth the time or effort to consider more deeply. The flaws in this approach are threefold.
“Backing retail is backing productivity growth; it is vital we continue to reskill people for the digital age”
Firstly, it misses the power of the ‘everywhere economy’. Retail is in every constituency, employs millions, impacts all the industries in its extended supply chains, and touches the lives of us all every day.
This makes retail a powerful lever the government can pull to drive a more productive economy in all regions. Between 2019 and 2022, productivity growth in retail outstripped the rest of the economy by more than two to one.
Backing retail is backing productivity growth. It is vital we continue to reskill people for the digital age.
Secondly, it misses the power of retail’s diversity. Large and small retailers exist in a symbiotic relationship, creating a complete offering for all consumers, and driving competition in prices and quality.
Large anchor stores bring in the footfall that feeds smaller independents, while independent shops can create a variety that keeps every high street unique and attractive. If the goal of retail is to serve its customers, it is serving them well.
Thirdly, it misses the cumulative impact of government activity. Policy setting by almost every government department impacts retail in some way. And when those changes put cost into businesses, we all feel the effects. We feel the rising inflation. We feel the loss of investment. We feel the shuttered shops and lack of jobs. We all pay for it.
We have a great retail industry made up of great people. Political parties should capitalise on this, not cannibalise it.
They must overcome the kind of political short-sightedness we saw in the autumn statement and instead focus on driving the innovation, investment and positive change we know the industry is more than capable of delivering.