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A consortium consisting of some of the largest retailers in the UK has warned of inevitable job losses, retail closures, and rising prices as a result of the Budget’s tax increases and other cost increases. Tesco, Amazon, Greggs, Next, and many other retailers have requested that the Treasury reconsider some of the measures introduced. The “cumulative burden” of the Budget changes and other upcoming policies, according to these firms, will amount to an additional £7bn in costs next year. In a letter to Chancellor Rachel Reeves, they made an urgent appeal for help.
The measures in the Budget, for example, a rise in the tax that firms pay on their employees, have been widely criticized by businesses arguing that this would stifle growth. However, concerns have been most pronounced in the retail and hospitality sectors, where many young people obtain their first jobs. These sectors face increased costs resulting from next year’s hike in the minimum wage.
The government has defended its tax increases, stating that these are necessary to avoid cuts to public services, and the raising of the minimum wage, with additional benefits for younger workers and apprentices, has been lauded by trade unions. However, the British Retail Consortium (BRC), a group of businesses, has cautioned that “the sheer scale of new costs and the speed with which they occur create a cumulative burden that will make job losses inevitable, and higher prices a certainty.”
The signatories of the letter include big UK retailers such as Aldi, Asda, Boots, Currys, Lidl, Marks and Spencer, Primark, and Sainsbury’s, as well as charity shop group the British Heart Foundation and trade group Associated Independent Stores. From April 2022, all large companies will have to pay higher National Insurance Contributions (NICs) for each member of staff, with employer NICs starting at a lower threshold than currently – at £5,000 instead of £9,100 – and the rate increasing from 13.8% to 15%.
According to the BRC, this will cost British retailers £2.33bn annually. Rising minimum wage costs from April onward, on the other hand, are expected to set the sector back an additional £2.73bn. The BRC stated that another £2bn will be added to the retail sector’s overall expenditure as a result of a new packaging levy that comes into effect in October 2025. The organization claims that the levy will cost smaller businesses, but the new levy will cost the retail sector another £2bn. The letter calls for the government to phase in the NI changes and delay the start of the extended producer responsibility scheme.
The BRC has likewise urged the government to reduce business rates, a property tax that the BRC claims will cost retailers an additional £140m annually after April. A Treasury spokesperson counters the claims, stating that thanks to exemptions for small businesses, “more than half of employers will either see a cut or no change in their national insurance bills [and] there will be £22.6bn more for the NHS.” Due to the NI changes and higher interest rates, a company update by Begbies Traynor on Monday revealed an increase in “support from our insolvency and business recovery professionals.
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