(qlmbusinessnews.com Wed. 20th Nov, 2024) London, UK —
High Street in Crisis: Retailers Urge Reforms as Budget Adds £7bn Costs
The UK’s retail industry is bracing for significant challenges following tax increases announced in the recent Budget. Retailers have warned of “inevitable” job losses, rising prices, and potential store closures as a result of the higher costs imposed by the government.
Major players, including Tesco, Next, Amazon, and Greggs, along with over 70 other companies, have written to Chancellor Rachel Reeves, urging a reconsideration of measures they claim will add billions to a sector already operating on slim profit margins.
Cumulative Costs Threaten the High Street
The British Retail Consortium (BRC), representing the signatories, stated that changes such as the rise in employer National Insurance Contributions (NICs) and the upcoming packaging levy would cost the retail sector an additional £7 billion annually. Retailers argue these costs cannot be absorbed and will lead to inflation, reduced wages, and job losses, particularly for entry-level positions.
The letter described the combined costs as a “cumulative burden” that threatens to derail the sector. Among the most pressing concerns is the rise in employer NICs, which will increase from 13.8% to 15% while lowering the threshold for payments. This alone is expected to cost retailers £2.33 billion each year.
Additionally, the rise in the minimum wage, set for April, will further strain businesses, adding £2.73 billion to payroll expenses. From October 2025, the new packaging levy, part of the Extended Producer Responsibility (EPR) scheme, will shift recycling costs from councils to businesses, adding another £2 billion.
Calls for Government Action.
The letter appeals for a phased introduction of the NIC changes, a delay to the EPR rollout, and a reduction in business rates, which are set to rise by £140 million next year. Retailers fear these measures could jeopardise the government's own growth ambitions, forcing businesses to halt expansion plans and focus on survival.
High Street fashion retailer Monsoon and outdoor brand Mountain Warehouse highlighted the strain on their operations, with executives warning that the measures could force them to divert investments from new stores to sustaining current ones.
Differing Perspectives.
While businesses have criticised the tax increases, unions argue that retailers must shoulder more responsibility. GMB Union's Nadine Houghton dismissed the complaints as “pathetic,” accusing companies of exploiting low wages that require government support through in-work benefits.
The Treasury has defended its decisions, emphasising the need to “make difficult choices” to avoid cuts to public services while addressing inflation and funding critical sectors like the NHS. Smaller businesses, it added, will benefit from exemptions, with over half seeing no changes to their NIC bills.
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