Sainsbury’s has said it was facing a £140m annual hit from the National Insurance changes. Food retailers are also braced to feel the added pressures of a tax on family farms and entrepreneurial food suppliers as well.
“Every retailer you speak to will be saying ‘bloody hell, this is hard for us,’” Asda’s chairman Lord Rose said earlier this month.
One bone of contention is that there has been no “serious movement on business rates and no support for city centres or high streets” at a time when costs have spiked, one retailer complains.
Reeves has said she will extend business rates relief for retail, hospitality and leisure properties, although the discount is going to be smaller than it currently is, and then would be permanently reducing their tax bills from 2026.
But the changes are not seen to go far enough.
A retailer who has been in regular talks with ministers says they wrongly assumed that “if we were accommodating on other things that would cost money, then there would be some balance created on something like business rates that we’ve all lobbied on for a long time”.
The Government is keen to patch things up with retailers. Sources say that Treasury officials had been making calls to some retail chiefs when they found out about the BRC’s plans for a round-robin letter, explaining to them why they have had to make such tough decisions.
“It doesn’t mean we agree with the Treasury, but the tone was constructive,” says one source.
A Treasury spokesman says that with “public services crumbling and an inherited £22bn fiscal black hole from the previous government, we had to make difficult choices to fix the foundations of the country and restore desperately needed economic stability to allow businesses to thrive.
“By doing this, more than half of employers will either see a cut or no change in their National Insurance bills, there will be £22.6bn more for the NHS and workers’ payslips will be protected from higher tax.”
But retail bosses who felt hopeful over the summer are fast losing patience. Although one retail chief acknowledges that part of the issues could merely be an “inexperienced team in Government finding its feet”, he says all of the big talk about growth strategy has dissipated.
“It has gradually sunk in that there is nothing much there,” he says. “The Budget was the chance for Labour to relaunch a plan for growth but instead it turned into a punitive tax on employment investment and profits.
“Most retailers were braced for an increase in employers’ National Insurance and were ready to play their part in contributing to public services, but the lowering of the threshold was unexpected.”
For the legion of highly paid lobbyists who were quick to embrace Labour after its victory, reality is proving a bitter pill to swallow.