'Smoke and mirrors': John Healey criticised over business rates and minimum wage announcements
Chancellor John Healey’s Budget announcement on business rates has been criticised by a senior representative of the retail trade.
The Chancellor said he was determined to champion “the small British firms that give character to our communities” like bakeries, hair salons and cafes as he announced plans to take 70,000 firms out of paying business rates through increasing the threshold for relief from £12,000 to £18,000.
He said this would be paid for by increased taxes on gambling and ensuring VAT is paid on sales made via online marketplaces, while adult gaming centres and vape shops would not qualify for the exemptions.
Mr Healey said other business rates would not rise above inflation for the next two years.
But Helen Dickinson, chief executive of the British Retail Consortium, described it as a “smoke and mirrors” announcement.
"While we welcome the decision to remove 70,000 small high street businesses from paying business rates altogether, the overwhelming proportion of employment and rates come from the 500,000 medium and larger retail outlets whose bills will go up once again. Retail accounts for around five per cent of the economy yet pays over 20 per cent of business rates. Increasing retail’s burden means less money for investment in jobs, stores, and keeping prices down.”
She also criticised a further 3.9 cent increase in the minimum wage for both under and over-21s.
“The above-inflation increase in the National Living Wage, combined with the lack of any reduction to employer National Insurance Contributions (NICs), will add further pressure on retail jobs.
“Retailers want to pay colleagues well, but Government cannot ignore the fact that today’s announcement adds another £2 billion on top of the £6.5 billion in additional employment costs that retailers have faced over the last two years.”
Victoria Wainwright, chair of West & North Yorkshire Chamber of Commerce, said: “The rise in the threshold that firms begin paying Business Rates is to be welcomed, especially for those working in retail and hospitality.
“However, there still remains significant challenges for employers that were not addressed in this Budget. Next year’s Spending Review needs to focus on reducing the significant cost pressures facing businesses if the country is to deliver the growth it needs.”
Pensions Minister Torsten Bell told reporters: “The simplest way of explaining the lots of different bits we have announced today, which is a really significant package, is that all retail, hospitality and leisure firms will see their business rates frozen, cut or removed entirely over the course of the next few years.
“We're paying that by requiring online businesses to pay VAT properly. “