UK's 'coronavirus budget' offers some relief to retail, but not enough
The UK’s still-new chancellor, Rishi Sunak, delivered his first budget on Wednesday and went some way to meeting the demands of the retail sector. But it was felt he didn’t go far enough in some areas, although the CBI called the overall budget “bold".
There are concerns though about where this will leave the economy with many spending pledges (both those to support the economy through the coronavirus and other pledges) to be funded by extra debt as government borrowing rises by at least £100 billion before the next general election.
Directly relevant to retail, business rates for companies whose property has a rateable value of less that £51,000 have seen those rates suspended for this year.
That looks good on the surface as only a small percentage of retail properties exceed that value. But these larger businesses are responsible for the lion's share of the total amount paid in business rates and so the £51,000 threshold is likely to be bad news for under-pressure department stores.
Recent casualty Beales, for instance, was crushed under the weight of a business rates bill in the millions. Other, bigger, department store firms such as John Lewis, Debenhams and House of Fraser are all struggling at present and the rates bills for their properties are huge.
The chancellor announced no other business rates concessions aimed at companies like those, nor a commitment to longer-term changes to the whole business rates structure. But he did promise a "review" of the system later this year, which could mean some relief in the years to come.
Other measures looked at plastic pollution and importantly for the fashion and beauty industries’ sustainability efforts, a tax on plastic packaging tax will start in April 2022. A £200 a tonne tax is to be paid by makers and importers of plastic packaging containing less than 30% recyclable material. But the former leader of the Green Party said such measures don’t go far enough and Greenpeace said it was a missed opportunity.
Meanwhile, Sunak also promised that workers who have to self isolate will get statutory sick pay, which should be good news for some retail workers.
Two other budget decisions that should affect retail workers for the better are the increase in the national insurance threshold from £8,632 to £9,500 and, looking further out, the National living Wage rising to £10.50 an hour by 2024. However, the latter move is likely to be unpopular with employers.
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