Who would be a retailer – even in the boom time of Christmas? As shoppers prepare to besiege our high street shops, tensions are rising in the back office.
Inflation may be zero –so why aren’t retailers making more of standstill prices?
Because the costs of business keep on rising. In addition to the increases in business rates, the new National Living Wage and the Apprenticeship Levy, retailers also face higher pension contributions, the higher National Minimum Wage, a mooted Scotland-wide deposit return scheme for drinks and other containers, possible charges in Scotland for appeals against rates valuations – and now proposals by Edinburgh City Council for a tourist levy.
All this, as Scottish Retail Consortium Director David Lonsdale points out, at a time when Scottish-specific retail sales data is weak and margins are under attack.
The UK BRC warns this week that high street retailers could have to stump up an extra £14 billion by 2020 to meet a swathe of new tax changes and initiatives introduced by George Osborne.
With the country’s retailers already grappling with significant structural challenges, the burden of paying business rates, the chancellor’s national living wage and apprenticeship levy proposals mean that their costs will soar.
The warning from the British Retail Consortium (BRC) comes in the same week that the living wage foundation is set to raise its recommended pay rates, in a move that will pile further pressure on the sector.
Big bills on the horizon include a business rates bill for the retail industry set to rise from £7.8 billion to £8.8 billion by 2020; a £2.5 billion rise in wage bills with the National Living Wage, and the apprenticeship levy reckoned to cost £126.8 million in its first year – and totalling £651.9 million over the next five years.
Says Helen Dickinson, BRC director general, “We want to play our part in tackling low pay and encouraging social mobility but we are being hindered by business rates which are the biggest non-controllable cost that retailers face. We need flexibility if we are to make all these changes that the government wants in the right way.”
Under plans announced by the chancellor, from April all workers over 25 must be paid the national living wage of £7.20 an hour, rising to more than £9 by 2020.
Ms Dickinson said there was a real risk that, as retailers sought to mitigate these rising costs, Britain could “start losing jobs and local investment in struggling communities and high streets outside the southeast”.
The BRC is calling for a short-term freeze on the annual uplift in business rates every year as well as more regular valuations of businesses’ rateable values, in advance of a much wider structural reform of the rating system. Such reform, she added, was even more essential now given Osborne’s announcement at the Conservative party conference to devolve business rates collection to local authorities.
Dave Lewis, the chief executive of Tesco says the situation was becoming untenable for retailers. He said that if the government wanted to help retailers it could look no further than the reform of business rates: “This burden is unsustainable and, if left as is, will threaten jobs and growth in an industry vital to the UK economy.”