Chief Executive’s Blog: Budget Verdict

Last weekend I wrote in The Grocer about my hopes and fears for the budget.  Here’s my verdict on what was announced, and what it means for our sector.

I have to start with business rates.  There was a crescendo of media noise, and business organisations (with ACS prominent) calling for reforms to the business rates system.  In summary, I was underwhelmed if not entirely surprised by the Chancellor’s response.  The short-term relief was targeted at pubs, with no support for other sectors like petrol forecourts which have their rates calculated on a similar basis and have seen some big increases in the last revaluation.  Even pubs might feel they’ve been served a short measure, with just £1,000 rate relief for a majority, but by no means all, pubs for only one year.

The extra transitional relief for small businesses was a bit of a damp squib too: it only applies to businesses which had a rateable value of less than £12,000 under the last valuation, and have seen that figure rise to over £15,000 now.  That’s a pretty small segment of premises in our sector and across the business community.

One announcement I’m pleased to endorse is the £300m fund for councils to allocate to discretionary rate relief.  This is a long-standing policy ask from ACS, because the current discretionary rate relief powers are chronically underused.  This is a chance not just to help businesses in need, but to get councils in the habit of using discretionary relief (which is already half-funded by central government) to help the businesses that need it and have earned it in their local area.  The unanswered question is: which businesses will councils give this support to?  We see it as our job to explain why those hardest hit by rates increases, those who invest in their business and local community, and those who play a particularly important social role should be first in the queue for this support.  It also comes down to individual businesses to make their case locally, and this is a perfect example of why building relationships with councillors and local policy-makers is so important for convenience store owners.  We’ll help you to present your case or discretionary rate relief, but you are always your own best lobbyist locally.

We had hoped for some changes to proposals to limit businesses’ ability to appeal their rates bill.  And we got change, to exactly the same policy but with different words.

Finally on rates, while I was pleased to hear the Chancellor reference the inequities between shops and on line businesses, the deadline he set for a proper review of business rates is 2020, with businesses not seeing any impact on their rates bills until 2022.  That’s the definition of kicking it into the long grass.

Onto the rest of the budget, the main media reaction focused on changes for the self-employed.  The reduction in the tax free allowance on dividend payments for owner-directors will impact many in our sector, as will changes to NICs for the self-employed.  As well as the immediate financial impact of these changes, we should see this policy as an indication that the Taylor Review into self-employment will try to reduce perceived tax advantages for the self-employed.  Whether this is the right approach for gig economy workers delivering takeaways or driving taxis I don’t know, but it won’t help the many retailers in our sector who invest, take risks, work harder than more or less any other group in the economy, and still take home hourly wages close to the National Living Wage.

Of course duty rates always feature towards the top of our budget agenda, and once again it’s hard for our sector to give Mr Hammond top marks for his work here.  Alcohol and tobacco rates rose based on inflation calculations that bear little resemblance to those we see in a retail market characterised by sustained deflation.  There was a kicker here too: the introduction of a minimum excise tax on tobacco coming in on 20 May.  That’s the same date as it becomes illegal to sell anything other than tobacco in standardised packaging, and to sell packs of less than 20 cigarettes.  So, from that date on the lowest price for any pack of cigarettes will be significantly increased, driving more consumers to the illegal tobacco market.

This budget may not have been as shocking as George Osborne’s July 2015 budget, which still gives me nightmares, but this was most definitely not a budget to please the nation’s 50,000 local shops.

This entry was posted by Leah on Mon, 13/03/2017 - 09:38