Murphy calls for 'considered approach'
Retailer: ‘higher taxes will damage key sector’
A senior figure in the retail sector has urged the Scottish government to avoid adding to other pressures facing the industry by introducing higher taxes.
Andrew Murphy, chairman of the Scottish Retail Consortium and an executive at John Lewis, said retail was one of the country’s biggest employers and drivers of growth and exports, but it needed help from government.
He also announced that the SRC is to prepare a report on productivity in the Scottish retail industry. It will look at what is driving productivity, the changes taking place, and what is needed to support innovation and investment in the industry.
He said the “cumulative burden of the National Living Wage, the upcoming Apprenticeship Levy, and an anachronistic business rates system, is having a disproportionate and damaging effect on businesses which have always been operated on low margins.
“In our competitive market, where profit margins are often razor thin, these costs are placing question marks over commercial investment, jobs, the viability of many High Streets, and traditional business models.
“Put simply, both the UK and the Scottish governments have to ask themselves what they want. If investment in town centres and in jobs are important, then there needs to be a move away from a tax system that extracts disproportionately from businesses who rely on property and people.”
Mr Murphy, speaking at the SRC’s annual reception at the Glasshouse in Edinburgh, appealed to new business minister Paul Wheelhouse to support the industry.
“We are a sector which is dynamic,” he said. “Thirteen per cent of all new businesses in Scotland last year were retailers. And we have an enormous impact beyond our shops.
“Billions of pounds of Scottish products are exported by retailers every year. Those exports play a huge role in developing the Scottish economy, especially the food and drink sector. Just as importantly we provide a key market for thousands of suppliers: from logistics companies moving our products to electricians resolving issues in stores.
“The multiplier effect of retail on the Scottish economy is measured in billions and touches almost every element of it.
“However, away from the front of the store there are enormous structural changes affecting the industry. The transformational impact of technology, multi-channel retailing, and the increasingly competitive market, are all disrupting, challenging and changing the retail landscape.
“We have had to adjust to customers focusing on value and becoming highly price-sensitive,” he said. Turning to Mr Wheelhouse, a guest speaker at the event, he said: “Minister, I suspect this is something your colleague – the Finance Secretary – will become increasingly alive to when deliberating over the right rates of personal taxation in the months ahead.
“The best outcome for retailers, households and the economy, is for tax rates for the vast majority of people to be at least the same north and south of the border.”
He said the industry was capable of adapting to change, but warned: “It’s time for a more considered approach. With the scale and complexity of issues facing our industry, a supportive public policy environment has never been more necessary.
“So with a new Parliament and a fresh Government the Scottish retail industry wants now to engage even more proactively and constructively with the public policy debate.
“Retail touches so many parts of Scottish life, and we play such a crucial role in the Scottish economy. I believe now is the time for Government to look more closely at how they can create a strong, successful Scottish economy which will allow retailers to thrive and encourages investment which promotes employment, skills, productivity and great retail place-making.
“Last week the Economy Secretary outlined that he saw increasing productivity as crucial to economic growth in Scotland. We share that view. Despite productivity in retail growing faster than across the economy as a whole since the downturn in 2008, it remains a pressing issue.
“We want to put retail at the centre of this debate. That’s why today I’m announcing that the SRC are to prepare a report on productivity in the Scottish Retail industry. That report will examine what is driving productivity trends for Scottish retailers, the changes taking place, and what we and government can do to support innovation and investment in our industry.
“With the devolution of income tax and the assignment of VAT, the Scottish Government have a direct stake in growing Scottish retail. Therefore, I am hopeful they will look closely at our suggestions to deliver economic growth and a better environment for Scottish customers.”
Photos: top – Andrew Murphy, above – Paul Wheelhouse (by Terry Murden)