Retail closures loom as employment costs and business rates soar
The reality of the government-imposed rises on employment costs and business rates is starting to bite with retail organisations and greeting card indies expressing their fears.
The British Retail Consortium (BRC) has warned one in 10 part-time retail jobs are at risk over the next three years due to the national insurance changes and minimum wage increases while the British Independent Retailers’ Association (BIRA) is concerned many shop owners are deciding to close rather than take the added weight of business rates relief dropping from 75% to 40%.
Carl Dunne, who owns Cards & Gifts in Dronfield, explained how his 2025-26 bill from North East Derbyshire District Council has just arrived and rocketed by 200% from £150 per month to a startling £450 – and that’s in addition to the NI increases.
“How can anyone increase this by that percentage when the rate of inflation is only 2.3%,” Carl fumed. “I’m just so angry as the government feels it’s OK to rob all the small businesses to fill in their supposed black hole. With all the increases across the board I’ll be having to find some extra £650 each month, where do they think we can get this from?
“Sadly, I think so many small shops will be closing their doors in the very near future which is going to be so sad out there. It’s not achieving what the chancellor has set out to do as all this will do is put up the dole queue.”
BIRA chief executive Andrew Goodacre echoed the sentiments: “We’re seeing a deeply concerning trend of pre-emptive closures. Shop owners are doing the maths on the increased national insurance contributions, higher minimum wage costs, and the looming reduction in business rates relief, and many are concluding that continuing simply isn’t viable.”
He said there’s a “perfect storm” for independent retailers from the combined impact of employers’ national insurance rising to 15% along with it kicking in on all wages over £5,000, down from £9,100, plus the minimum wage increasing to £12.21, and business rates relief on the retail, hospitality and leisure sector dropping from 75% to 40% – local councils can choose to use these discretionary relief powers and are reimbursed by the government.
Anne Barber, owner of In Heaven At Home in Market Harborough, is another indie retailer to receive a revised rates bill in the last few days: “As I feared after the budget it’s going up by 150%! I’m not sure if the government don’t realise the impact this along with salary rises and National Insurance will have on small businesses or whether they don’t care.”
She gives thanks for cards as, even in tough times, they keep up footfall, adding: “Thank goodness for cards – even on the quietest day cards bring customers in as they’re the nearest thing we have to an essential product purchase!”
After approximately 13,000 shops closed their doors in 2024, forecasts suggest this could rise to as many as 17,000 closures in 2025, and BIRA says the scale of the crisis facing British High Streets is unprecedented in recent times.
Retail is the largest private sector employer in the UK with more than 1.5million part-time workers, just over half of all the jobs in the industry and it expected all the changes will add £7billion to retailers’ labour costs this year alone.
The BRC emphasised the NI and minimum wage changes will significantly increase the cost of hiring part-timers where many previously had been earning under the threshold.
Explaining that nearly 20% of retail staff are under 25 BRC CEO Helen Dickinson said: “Retail has long offered the first rung of the career ladder to hundreds of thousands of young people, playing a vital role in communities up and down the country.
“However, between rising employer NI contributions, higher NLW costs, and incoming employment regulations, the government may be kicking away the ladder for the next generation. One in 10 part-time retail roles are now at risk of being lost.”
Helen said many jobs could be saved if the government could “find ways of mitigating” the extra costs the industry faces this year, while “ensuring a pragmatic approach” to the Employment Rights Bill that focuses on tackling unscrupulous employers, protecting employees while supporting employment.
And BIRA is calling for an urgent review of the planned tax changes and additional support measures for small retailers to prevent what it describes as a “devastating blow” for independent High Street businesses.
