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Call to help stores control costs

Resist temptation to tax and regulate, says retail boss

David LonsdaleA retail industry leader has urged the Scottish government to wean itself off the “rush to regulate and tax” to allow the sector to grow.

David Lonsdale (pictured), director of the Scottish Retail Consortium has warned that adding to cost pressures already faced by the industry will not encourage retailers to invest.

“The cumulative burden of government-imposed tax and regulatory costs has become an acute issue for the industry and has made the trading environment tougher,” he says in a new year message.

“In addition to the year-on-year business rates escalator, this cumulative burden is seeing retailers grapple with a hotchpotch of measures including the implications of the new national living wage, rises in the national minimum wage, the new apprenticeship levy, statutory increases in employer pension contributions, a mooted £86.4 million Scotland-wide deposit return scheme for drinks bottles and containers, as well as proposals to allow councils to levy local sales taxes.”

Mr Lonsdale, who before Christmas welcomed the Scottish finance secretary’s decision to review the business rates system, nevertheless warned of ongoing challenges that need to be addressed.

“2015 was a year of contrasts with shoppers benefitting from stiff competition and keen prices, but with many of Scotland’s retailers facing a testing period and the industry as a whole witnessing the loss of over 3,500 retail jobs,” he says.

“The industry continues to undergo significant transition as it adapts to changing shopping habits against a backdrop of anaemic sales, shop price deflation, rising costs and thin or non-existent profit margins.

“Retailers are working ever harder to maintain, let alone grow, sales and are rising to the challenges that profound structural and economic change brings through innovating, becoming more productive, and by investing in new online and logistics capabilities and a higher skilled workforce.

“2016 holds out a brighter prospect especially if recent improvements on the employment, earnings and population growth front continue.

“Ahead of what will be a politically charged few months in Scotland there needs to be a thorough debate about how the next devolved government and parliament will help raise the country’s rate of economic growth and about the boundaries of regulatory intervention in the economy.

Lifting private sector investment will be key. That’s made all the more difficult when costs are rising as it means diverting cash and resources away from growing the business.

“This reinforces the need for a more coherent approach to policy making, where business and government as a whole works together to deliver a joint retail industry strategy to nurture the sector and help it fulfil its potential.

“It also requires our political parties to wean themselves off the rush to regulate and tax, and ultimately adopt policies for the election which keep down the cost of doing business and the cost of living and improve private sector growth.

“Every policy should be tested against a benchmark of whether it will make Scotland a better place for retailers and other firms to invest and expand.”

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