Autumn Budget 2021, business rates and beyond: Independent retailers respond
The Autumn Budget 2021, as announced by Chancellor Rishi Sunak yesterday, revealed plans for a 50% business rates discount for retailers for one year (with the relief capped at £110,000) but avoided any major reform for now. Independent retailers and brands breathed a sigh of relief, but is it just papering over the cracks? Add to that, there was no mention of introducing an online sales tax, which many believe is needed to give a more level playing field to bricks and mortar stores. Here’s the word from the shop floor.
Steve English, Managing Director, Cooshti, Bristol
"Obviously the 50% discount on business rates is good news for retailers, but we just hope it will be a permanent cut! I’m not sure changing the revaluation cycle to three years will help, as it may mean rates going up more frequently for some. Most leases have rent reviews every five years, and that’s more suited so you know where you stand.
Regarding the much talked about online sales tax, I’m unsure if that tax was brought in if it would apply just to the big online retailers, or whether it would impact the online sales of ‘clicks & mortar’ stores like us as well. It wouldn’t help us if it did as it would just be an additional tax to pay.
On the rise of the minimum wage, I think that’s justified as the cost of living is going up for everyone. I can see it getting to £10 per hour in the next budget. It won’t make too much of a difference to us as we usually pay above the minimum wage and had planned rises anyway."
Simon Carter, Founder and CEO, Simon Carter (with four stores in London: Mayfair, Connaught Village, Crystal Palace and Chiswick)
"The business rates relief is, well, a relief. To have a reduction of 50% through to April 2023 gives the high street a real boost. The risk is that retailers model their break-even on this lower rates band, and are then faced with a financial cliff edge if the rates go back up to 100% in April 2023.
Also, it hasn't really addressed the structural issue that underlies the unfairness of the current system which massively favours online over bricks and mortar.
On the issue about “no extra rates for shop improvements”, as ever with Rishi Sunak the devil is in the detail. I’ll need to check on that as my accountant thinks it only applies to owner-occupiers, and not to pure tenants.
Regarding the minimum wage increase, the reality is that with the extreme labour shortage that our sector is experiencing, employers are probably offering more than the national minimum wage anyway in order to recruit. Obviously, this is a government that is perfectly at home with high inflation, as Boris Johnson set out at the Tory party conference. My view is that will be a small added cost for some retailers and support businesses but, given the rate of inflation in wages, it was coming soon anyway. This way Sunak can simply claim all the credit."
Victoria Suffield, Owner and Director, The Hambledon, Winchester
"I’m pleased with the 50% reduction in business rates as far as it goes, but the wider picture needs to be addressed within the year as I’m not sure what renaissance we can expect on the high street in that time. It also doesn't address the inequity of traditional retail business rates and the amount paid by online businesses. Although there seems to be an intention to review the situation, more decisive action is needed, not least to shore up the country's tax revenue. I certainly wasn't imagining the end of business rates, but I was hoping for a significant rebalancing.
On another note, I absolutely can't argue against reasonable wages. I support a national living wage. I think the problem is that a bricks and mortar business model works on pretty low margins with regard to costs for property, rates and stock, all of which are usually very high, so any mandated increases make financial sustainability even harder."
David Finlay, Co-owner, Elements, Norwich
"The extension of the business rates reduction is good news. That’s helped us a lot over the last year or so, and it will do going forward. I’ve always been under the impression that we were all aware of business rates when we started in business, and you factor that in to your whole operating costs. I’m quite aware that things need to be paid for, and a certain tax needs to be raised against those costs, so I see any reduction as a bit of bonus. There is talk about long-term restructuring of business rates, but we shall see.
For now, alongside the business rates reduction, we’re probably going to see a lot of inflation in the next year or so, with the combination of supply chain issues, the fall-out from Brexit and import duty. Add to that the increase in the minimum wage, and an increase in a lot of people’s wages predicted over the next year in general, I think the increase in expenditure is only really going to just balance things out. Whether or not we feel an awful lot better off, I don’t think so! It’s just going to be matching what we have to pay out.
I have different thoughts regarding the balancing up of online sales and the tax that needs to be introduced on that. It’s very unbalanced as far as bricks and mortar stores are concerned. We do sell through our website as well, and through our eBay and Amazon stores, and they do pretty well, but they are not the main part of the business which is still the walk-in trade. There is an unfair bias towards the likes of Amazon and eBay on the tax front compared to bricks and mortar stores which needs to be addressed, as they can offer products cheaper, which makes it harder for us."
Main image: PA Media