Conservative chancellor Jeremy Hunt announced his Autumn Statement yesterday, prioritising “stability, growth and public services” through tax rises and spending cuts in a bid to tackle cost-of-living and inflation.
Speaking to MPs in the House of Commons, Hunt said the budget had involved “difficult decisions” after announcing the UK was officially in a recession.
The main points of the statement included:
- Living wage increase to 10.42 pounds
- 13.5 billion pound package to support business rates payers
- 25 billion pound tax increase by 2027-28
- A reduction in tax threshold
Since the announcement, Hunt’s plan has been met with mixed reviews, as retailers and linked organisations begin to issue responses to the budget and predictions on what it could lead to.
FashionUnited has highlighted some of the responses below.
British Retail Consortium (BRC)
In a statement regarding the autumn budget, the BRC’s chief executive Helen Dickinson noted that inflation had damaged consumer confidence and is holding back demand, which has clashed with rising costs for businesses during the crucial Christmas period.
Referring to the government’s Business Rates and Transitional Relief, Dickinson said: “The announcements today show the government has heard the concerns of the retail industry. Retailers are working incredibly hard to support customers – expanding value ranges, fixing the prices of essential items, and offering discounts to vulnerable households.
“This Autumn Statement supports that commitment by reducing upwards pressure on prices in the short term, and helping retailers protect jobs, keep shops open, and protect the vibrancy of local communities.
“The government has taken an essential step towards longer term reform of the broken business rates system by announcing the scrapping of downwards phasing of transitional relief. This decision means that April’s bills reflect market conditions and retailers will pay only what they owe, rather than being forced to overpay their rates bill when the value of their property has already fallen. This represents the first step towards a more fundamental reform of the broken business rates system.”
Finance director of British clothing and accessories brand Weird Fish Jon Goodwin showed both support for the package, as well as slight hesitancy to fully back the plan.
In a statement to FashionUnited, Goodwin said: “The 14 billion pound support package for business rates is appreciated. There has been a significant need for business rates to be overhauled to make it fairer particularly for the retail, hospitality, and leisure sector where costs are substantial. These sectors are still recovering from the covid period which was quickly followed by the global uncertainty and the cost of living crisis.
“Yet this package is said to help around 700,000 businesses across the UK. According to government figures, there are estimated to be 5.5 million UK private sector businesses in the UK. Therefore, only around 12 percent of businesses in the UK will benefit, so it doesn’t go far enough.
“The decision to increase the energy windfall tax from 25 percent to 35 percent is welcomed, but the existing system needs to be carefully reviewed. It appears that while the input cost of energy hasn’t increased dramatically over the past months, energy firm charges have gone up. Businesses are still struggling enormously with energy bills so clearly more needs to be done to ensure this tax is actually having the desired effect.”
Federation of Small Businesses (FSB)
The national chair of the FSB, Martin McTague, said Hunt’s decision to freeze thresholds will hit small businesses and his growth measures will not be enough to spark needed economic recovery.
In his statement, McTague noted: “Today’s budget is high on stealth-creation and low on wealth-creation, piling more pressure on the UK’s 5.5 million small businesses, their employees and customers.
“While tackling inflation is essential, so are measures to create conditions for prosperity, growth and support for enterprise. Today is a missed opportunity to avoid further economic slowdown.
“Small businesses, which account for more than 16 million jobs in the UK, were already facing an acute cost of doing business crisis through soaring costs, falling revenues, shrinking availability of affordable finance, and a rise in invoices being paid late.
“On top of all that, they now face even higher taxes, cuts to innovation, and a recipe for a longer and deeper recession.”
McTague criticised the slashing of dividend taxation allowances, which he said could negatively impact owners of small limited companies, and freezing the threshold for employer National Insurance, a move McTague suggested could threaten an increase in unemployment.
He went on to say that transitional relief was “welcome news” as it will result in businesses paying a “fairer level of rates from year one”, while also commending Hunt’s decision to continue with the energy support package for small firms until April.
British Property Federation (BPF)
Like the FSB, BPF gave a mixed response to Hunt’s statement, both acknowledging his decision to freeze business rates while calling on the chancellor to still take plans further.
The organisation’s chief executive, Melanie Leech, said: “Businesses across the UK are facing unprecedented cost pressures and we are pleased the Chancellor has listened to the BPF, frozen the business rates multiplier and introduced further reliefs, to help prevent a tide of insolvencies on the high street. Many high street businesses have been paying artificially high rates bills for years and the Chancellor has recognised this is simply not sustainable.
“The reforms of Solvency II have the potential to unlock further institutional investment but we need to be bolder in creating new models for public-private partnership and investment if we are to deliver local infrastructure and transform town centres whilst tackling climate change.”
Retail Northern Ireland (Retail NI)
As part of the statement, Hunt said Northern Ireland would be receiving 650 million pounds in additional support, with many of the decisions announced yesterday to also apply to businesses in the country.
Chief executive of Retail NI Glyn Roberts responded to the plans stating: “Our members are facing a perfect storm of cost challenges from Energy, Business Rates and a major downturn in consumer spend. It is disappointing that there was very little further support in the statement for local small businesses struggling to keep the lights on.
“The freezing of the threshold for employer National Insurance is a stealth tax on small businesses and jobs and will result in higher costs”
“We note the Chancellor announced a 13.6 billion pound package of business rate support for small businesses in England. We will be lobbying for the Barnett consequential of this to provide rates relief to struggling small traders In Northern Ireland.”
UK general manager of European marketplace Ankorstore Tarun Gidoomal commented that small businesses and retailers were strained under the numerous changes they have faced over the past year, adding that 97 percent of independent British retailers believe the government has not provided enough support during this period.
In a statement to FashionUnited, Gidoomal continued: “Hunt saying he will ‘soften the blow’ on businesses is not enough, and independent retailers up and down the country need more in order to survive the ongoing ‘permacrisis’ of 2022.
“If the government fails to extend the Energy Relief Scheme, as was missed out of today’s budget entirely, the majority of independent retailers (89 percent) believe they will suffer as a result, with almost half of all independent retailers (42 percent) saying that this would cause them to close or consider closing.
“The closure of so many great independent retailers would have huge and far reaching consequences for the communities who depend on these shops – and the social infrastructure they provide, as well as Britain’s economic recovery out of what is being predicted to be our longest ever recession. We’re calling on the government to revisit today’s budget to offer more for small businesses to create greater stability and to promote growth amongst British high streets. Doing nothing is not an option.”