Budget gains and pains, retailers’ chief warns

Independent retailers have welcomed the government’s pledge to get tougher on shoplifting but warned other measures in the budget will lead to ‘a rough year ahead’.

Chancellor Rachel Reeves has promised to crackdown on in-store crime, currently at an all-time high, with an end to the £200 rule, more training for police and retailers and a clampdown on organised crime gangs.

But the industry’s leading body has warned the inflation busting rises to the minimum wage, and a 1.2 per cent increase to 15 per cent in employers’ national insurance contributions, will be a test for hard-pressed independent retailers.

The new move to tackle the shoplifting epidemic came in the same week a survey by the Federation of Independent Retailers revealed retailers wanted tougher police action, more bobbies on the beat and harsher punishments on persistent shoplifters.

Ninety-one per cent of retailers who responded to the survey called for more police patrols on streets, while 90 per cent said shoplifters should be handed harsher sentences.

Responding to today’s budget, Mo Razzaq, the federation’s national president, said: “While there were some gains, there was also some pain for independent retailers at a time when our finances are being stretched to the limit.”

The Labour Chancellor’s first budget also pledged to raise the national minimum wage for adults over the age of 21, by 6.7 per cent to £12.21 per hour and younger workers, aged between 18 and 20, and 16 to 17 will enjoy even larger increases, by 16.3 per cent and 18 per cent, respectively.

Mr Razzaq said: “Small independent retailers are the backbone of their communities. We provide employment and create jobs.  

“In many cases, we give young people their first jobs. As responsible employers we want to ensure we are paying a fair wage to our staff but a bigger than expected rise to the national living wage to £12.21 an hour from April 2025 is a step too far for hard-pressed small businesses.

“As well as paying our staff more in wages, we must pay more in national insurance and pension costs, at a time when many of our other costs, including energy costs, are rising.  

“There is no easy way for small retailers to combat these increases. As so many of the products that convenience store owners are price marked, we cannot pass these costs onto our customers.

“The only solution available to independent shop owners is to reduce staff hours and staff numbers and, somehow, take on even more hours ourselves.”

The Chancellor has also announced a 10 per cent duty on hand rolling tobacco, a flat rate duty on all vaping liquids, a one-off increase in tobacco duty and increases on alcohol duty rates on non-draught products in line with RPI.

Mr Razzaq said this was a further blow to retailers in the federation although a further freeze on fuel duty was welcomed, as was confirmation the 75 per cent rate for retail, hospitality and leisure relief would be maintained and the minimum secondary threshold for employers’ national insurance contributions would increase to balance the impact of the increase in the NLW on wage bills.

He added: “When tobacco prices rise, more smokers are lured to the illicit market which damages the business of legitimate retailers and damages communities. The government needs to do more to tackle the illicit market to better protect the livelihoods of members who legitimately sell tobacco.

“Small businesses play a vital contribution to their communities and to the economy, but with the cost of doing business soaring, many Fed members are struggling to stay in business. It is crucial that they are supported, so going forward, the government must put our concerns and our issues at the top of its agenda.”

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