HAPPY TV AD JINGLES MASK REAL RETAIL WOES

Cartoon cats, Christmas tinsel, tables bending under the weight of festive food: who could imagine retailers are having a tough time of it at present?

This is their best time of the year – and Christmas spend is on course to break all records.

But there’s another reality, equally true: rising costs, higher rates, extra charges, more levies, boarded up high street outlets – and the relentless onward march of online shopping ripping the heart out of thousands of high street retail businesses.

Who needs to traipse to the shops when you go stay at home, stretch out on the sofa – and traipse through Amazon?

Here in Scotland we have particular reason to be concerned about the health of the sector.

Retail spend here has been trailing the UK.

And there is a growing concern about the health and vibrancy of our high streets in towns and villages across the country.

Thus, of the many pre-budget submissions landing on the desk of Finance Minister John Swinney, that from the Scottish Retail Consortium this week is particularly worthy of note.

David Lonsdale, the SRC’s chief executive, has written a wide ranging and compelling brief. It goes well beyond the usual grumbles and groans about business rates. Not that these are unimportant – they are.

But it sets out why a healthy retail sector is of wider importance in Scotland than the revolving doors of john Lewis and M&S.

Retail is Scotland’s largest private sector employer, employing 13 per cent of the private sector work-force. However, some 3,500 jobs have been lost in the industry over the past twelve months.

The sector is undergoing enormous change during a sustained period of weak demand. And growing government-imposed costs have become an acute issue.

This change, says the SRC, “will require retailers to invest in new technology (both software and hardware), a higher skilled workforce, revamped warehouses and stores and better logistics capabilities.

“However, responding to this profound change has to be done against a backdrop of weak sales (down 1.9% over the past twelve months), shop price deflation, rising costs and thin or non-existent margins.

“The cumulative burden of government-imposed costs has become an acute issue at a time when retail sales performance is pallid.

“Over and above the year-on year non-domestic rates escalator, this cumulative burden is seeing retailers grapple with the implications of regulatory costs including the new National Living Wage, rises in the National Minimum Wage, the new Apprenticeship Levy, rising statutory increases in employer pension contributions and for staff training in response to statutory changes in alcohol licensing and tobacco legislation.”

Why should this matter to those of us on the other side of the counter? Consumers and government alike have a vital interest in ensuring a thriving retail industry as a route to more and better paid jobs, more investment – and additional tax revenues.

Piecemeal, ad hoc approaches no longer suffice – if ever they did. What the SRC would like to see is a more coherent approach, “one where industry and the government as a whole work together and endorse a joint retail strategy which supports and nurtures the growth and success of retail to help it fulfil its potential over the next 10 years.” This, it adds, could benefit not only the retail industry but its supply chain and the other sectors it touches such as tourism.

Under the Smith Commission proposals, half of the tax receipts from VAT are to be assigned to the Scottish Government. This means SNP administration now has a direct interest in nurturing higher levels of receipts from this tax – and a real incentive to help the retail sector survive and grow.

And, yes, reform of Scotland’s £2.8 billion business rates system is long overdue. Holyrood needs to review the options for fundamental structural reform of business rates. Already 41 private sector organisations – including manufacturers, engineering, tourism, hospitality, printers and publishers – have publicly backed calls for fundamental reform of the out-dated rates system in Scotland.

The SRC has previously voiced concern over the shifting balance in the burden of taxation between personal and business taxpayers over recent years, with business rates escalating in stark contrast to council tax for example.

The submission goes on to analyse and comment on the impact of council tax,New Devolved Taxes, the Apprenticeship Levy, Land & Buildings Transaction Tax and other fees, charges and levies including planning application fees, Business Improvement District levies, charges for alcohol license fees, water and sewerage charges, fees for building warrants and the Carrier Bag Charge – a lengthy list of imposts that collectively add to the rundown and closure of retail premises across Scotland.

Too often the mindset has been that shops and business owners “should do more for local communities” but in fact many communities owe their very existence to the presence of business outlets and retailers. Allow these to shrivel and die and communities die with them. This is what makes this issue so important.

 

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