Retail, being the largest private-sector employer in the UK, employs nearly three million individuals across various sectors such as shops, warehouses, transport, and headquarters. A significant portion of these employees, around 365,000, are affiliated with Usdaw. This diverse workforce includes individuals seeking flexibility to manage other responsibilities like caregiving, as well as long-standing retail staff who have advanced to managerial roles without formal qualifications.
The retail industry plays a crucial role in the everyday economy, with the involvement of farmers, drivers, warehouse staff, and service providers in the supply chain. However, the sector has faced challenges in recent years. Over the past decade, approximately 350,000 retail jobs have been lost, with 100,000 of those losses occurring in the last year alone. Additionally, more than 10,000 shops closed their doors last year, impacting both families’ incomes and the vitality of high streets.
To address these challenges, the Government has proposed a new permanent business rates reduction to support the retail, hospitality, and leisure sectors. Currently, despite retail contributing only 5% to the economy, it bears a disproportionate burden, paying over 20% of all business rates. This imbalance penalizes community-supporting shops, underscoring the need for fair adjustments to business rates.
One proposed solution involves increasing business rates for large non-domestic premises, including office buildings and banks, to offset the reduction in rates for high street businesses. However, this strategy could inadvertently affect larger stores, including supermarkets and anchor stores, jeopardizing jobs and customer footfall on high streets.
The potential ramifications of increased taxes on larger stores include reduced employee hours, more closures, and price hikes as retailers strive to manage escalating costs. Such changes could have detrimental effects on employees’ job security, training opportunities, and wage progression, ultimately impacting consumers’ shopping expenses.
It is crucial to recognize that imposing additional taxes on big stores may not be sustainable given the rising costs faced by businesses, including energy expenses, transportation costs, and the need to ensure staff safety amidst increasing incidents of violence and abuse. Any further tax burden could strain the retail sector, leading to cascading effects on jobs, prices, and overall economic health.
By excluding shops from higher business rates bands and slightly increasing rates for large office buildings, the government could generate the same revenue while safeguarding retail jobs and keeping shopping bills manageable. This balanced approach would support economic growth, preserve local jobs, and maintain price stability for consumers.
Ultimately, the focus should be on fostering a prosperous future for towns and cities by creating well-paid, secure jobs in the retail sector and encouraging investments in high streets and shopping centers. Collaborative efforts between organizations like Usdaw and the British Retail Consortium are essential to shaping a positive outcome in the upcoming budget, ensuring protection for shops and their workforce.
The proposed strategy involves implementing a substantial and permanent reduction in business rates for retail, hospitality, and leisure establishments with a rateable value below £500,000. By ensuring that no shop experiences a net increase in rates, the government can achieve fair revenue generation while supporting the sustainability of retail businesses and the livelihoods of those employed in the sector.