It’s interesting to see how Budgets have changed over the years. Generally, they’re more interesting (which also means more worrying and unpredictable) when the Chancellor is an ambitious politician mapping out their route from number 11 to number 10 Downing Street. Under Gordon Brown and George Osborne, Budgets were a tour taking in social policy and economic philosophy, a manifesto for the Chancellor as much as a report on the public finances. Philip Hammond strikes a different figure, very obviously constrained by the tight economic and political position he finds himself in, carefully tweaking the limited levers at his disposal. So how did he manage under these constraints, and what does it mean for local shops?
The Chancellor has received a lot of lobbying on business rates. It’s not just that organisations like ACS see their members faced with rising costs, it’s the glaring inequities of the system that grate. Invested in your store? Thanks - here’s a higher rates bill. Kept trading, paying rent and employing people while gig economy delivery drivers take goods from internet warehouses to your customers? Great – now pay proportionately higher rates than Amazon. The Chancellor has done nothing to address these problems, but he’s given you back the last quarter of your April 2018 rates bill increase. He’s also promised to value your store every three years rather than every five years, which is fairer … unless he now expects you do the donkey work to contact that valuation. The Treasury assure us the burden of valuation won’t shift to retailers, let’s make sure they keep to this.
Don’t blame the Chancellor for increasing your wage costs by 4.4%. The policy of a National Living Wage for people over 25, rising to 60% of median earnings by 2020, was set by the current editor of the Evening Standard, and Philip Hammond deserves credit for sticking to this policy rather than bowing to strong pressure for that target to increase. I would rather the Low Pay Commission had complete autonomy to set minimum pay rates, but it’s naïve to expect the Chancellor to reverse his predecessor’s policy on this.
Do blame the Chancellor raising tobacco duties. It’s seductively simple to raise tax on a product that most people would want to see used less. The problem is, every duty increase just feeds the illicit trade that hurts our members and of course costs the Treasury money too.
He delivered better news on alcohol though. A freeze on duty for everything except high strength cider and lager. Next month we’ll take part in a consultation on what the new rates for these products should be, but crucially any increase won’t come in until February – avoiding the nightmare of pricing in duty changes over Christmas, or printing out a category’s worth of shelf edge labels on New Year’s Eve.
This year’s Budget might be remembered for environmental incentives. The £400m investment in electric vehicle charging is absolutely the right approach, and it needs to find its way to the petrol forecourt retailers who are making an investment in these facilities, second-guessing technological changes and market forces and trying to decide which facilities to offer and where. The investigation into taxing plastic packaging comes at an interesting time, against the backdrop of debate about a deposit return scheme that would be an operational nightmare for small shops. Would a plastics tax be any better? I’m not sure, but the debate on ocean plastics, litter and environmental stewardship isn’t going to go away (and nor should it) so we should welcome the chance to have a broader debate about how to reduce the impact of packaging on the environment.
What did you think about the Budget? Get in touch and tell me what impact you think it’s going to have on your business.
