Budget plea

Shelve workplace levy and freeze tax rises, say shops

Shop vacancies remain a blight on the high street (pic: Terry Murden)

Retailers are demanding the proposed workplace parking levy is postponed, income taxes ruled out and action is taken to stimulate demand.

In its submission to the Scottish Government’s budget process, the Scottish Retail Consortium says any help to keep down shop prices will protect living standards and maintain the jobs of thousands of shop workers.

The household energy price cap will double to £3,549 from October and is likely to jump again in January, while wage rises are not keeping pace with inflation.

Retail is Scotland’s largest private sector employer, responsible for 233,000 jobs, but the SRC feels shops will take the brunt of the expected slowdown in spending.

Even after lockdown restrictions have been lifted, shopper footfall and shop occupancy rates have remained below pre-pandemic levels.

The consortium’s demands to John Swinney, the interim finance secretary, include new stimulus measures alongside curbs on new taxes and regulations. It is suggesting the government should:

  • Protect less affluent workers by ruling out increases in Scottish income tax rates
  • Consider introducing a Scotland-wide shopper stimulus along the lines of Glasgow’s voucher initiative
  • Rule out any increase in the business rate next Spring which is already at a 23-year high
  • Speed up restoration of the level playing field with England on the higher property business rate
  • Shelve workplace parking levies for the next 18 months
  • Curb the volume of devolved regulation being implemented or considered

David Lonsdale, SRC director, said: “Once again retail is in the eye of the storm, having just come through two incredibly difficult years of the pandemic. Shops are facing into significant cost spikes whilst customers’ disposable incomes are being eroded by inflation most notably due to the spike in energy prices.

“It’s somewhat perverse that retail, which was amongst the sectors most impacted by Covid, is once again and so quickly set to bear the consequences of this cost-of-living crunch. The indications are that it may be a third consecutive tough Christmas trading period.

David Lonsdale
David Lonsdale: costs crunch (pic: Terry Murden)

“This costs crunch comes as retail destinations and city centres continue to struggle in terms of shopper footfall with fewer commuters and business travellers.

“To help Scottish shoppers and storekeepers’ weather this storm we are suggesting concerted action to pep up consumer confidence and to cut the cost of doing business.

“It’s imperative the upcoming Scottish Budget is used to bolster shops and shoppers ahead of the economic tempest. In particular, the focus should be on protecting less affluent workers from income tax rises and shielding retailers from a further hike in the business rate.”

The submission follows the first meeting of new group established to help Scotland’s retail sector as it recovers from the pandemic has discussed soaring energy costs and the impact of Brexit.

The Retail Industry Leadership Group, co-chaired by Minister for Public Finance, Planning and Community Wealth Tom Arthur and the chief operating officer of the John Lewis Partnership, Andrew Murphy also considered how to deliver the Scottish Government’s Retail Strategy and began drafting priorities to help businesses grow. It also follows a report saying consumers are shunning online retailers who charge for returns. Full story here

Better news on closures

The SRC’s calls come amid some brighter data for the sector which shows a big fall in the number of chain stores shutting across Britain.

Closures in the first six months of 2022 dropped by a third compared with the first half of last year, according to accountancy firm PwC and the Local Data Company.

Shop openings are still below pre-Covid levels, but closures are now at their lowest level for seven years.

PwC said the shock of the pandemic had “eased” but warned that high inflation will hit the retail sector.

The data is based on a survey of more than 3,000 locations, including High Streets, retail parks and shopping centres in England, Wales and Scotland.

More than 6,000 stores closed in the first half of this year, but the numbers are sharply down on the previous 12 months.

Store openings are still lacklustre and below pre-pandemic levels, resulting in an overall loss of more than 2,200 outlets. That is an average closure rate of 12 stores a day, although it is the smallest number of net closures in five years.

“The good news is that we’re back on High Streets, there are more people out shopping and eating,” said Kien Tan, director of retail strategy at PwC.

“But the bad news is inflation hangs over us. It will affect shoppers in their pocket. But it will also affect businesses in terms of higher bills to pay. So there could be more closures to come,” said Mr Tan.

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