Energy cap and NI change welcomed but business rates relief and VAT cut are missing
The Chancellor’s mini-budget last Friday has received a mixed reaction from the greetings industry, who were pleased with the energy cap in the short term, and the cancelled rise in National Insurance, but less enthusiastic at no mention of a VAT cut or business rates relief.
“What we’d really been hoping for was a cut in VAT,” Heidi Early, co-owner of Earlybird Designs publisher and Stoke Newington retail outlet, told PG Buzz. “In the last recession it went from 17.5% to 15% and it really helped us. But no such luck this time.
“I think the 1p cut in personal tax will help our staff members and, of course, the scrapping of the health and social care levy will too short term but, personally, I think that was one tax everyone was willing to swallow.
“The energy bill help is welcomed but it should have been dealt with much earlier and businesses need more than six months’ reassurance – our deal doesn’t run out until March so we’re lucky but what happens then? We need to be able to plan more than six months in advance.
“As a small business the increase in the cost of goods is what’s crippling us and it means customers, both trade and retail, will spend less – nothing in the budget addressed that. Instead, this ill-thought-out headline-grabbing budget has made the stock markets jittery which in turn will increase the cost of borrowing which means as a business we ultimately won’t be able to invest as much into new card ranges.”
Following new Chancellor Kwasi Kwarteng’s measures unveiled on 23 September Jo Williams, owner of greetings and gift store Joco Interiors in Nuneaton, commented: “As we’ve just moved to a new shop the energy cap will be extremely useful for us, but we’ll have to see if a six-month cap will be enough in the long term.
“Nevertheless, it’s welcomed to assist us through the winter months. The cut to the National insurance rise is also very welcome. Although I have some part-time staff, the costs were considerable for my full-time employees.
“However, I was hoping there would be significant business rates relief, as costs have spiralled. It would have been welcomed by all small businesses to outweigh the additional costs we’ve incurred since dealing with the loss of footfall during the pandemic – stock increases, minimum wage rises and fuel costs. But something is better than nothing and we’ll have to knuckle down to get through what is to come.”
At Williams Of Audlem, owner Judy Williams added: “While we have already been well supported by our local authority, Cheshire East, who some years ago had the vision to adopt a policy of zero business rates for most small High Street shops, we have been left disappointed by Friday’s announcements by central Government.
“There is some comfort in capping business energy rates, but they are already excessively high compared to last year, and it’s only for six months. However, our main concern is that it doesn’t appear to address what is critical to most gift shops – consumer confidence.
“Although the cut in National Insurance may mean people will have slightly more money in their pay packets, there’s some concern from customers that this is at the cost of taking money away from already under-funded social care and benefits.
“As a business, we’d like to have seen grants being made available for insulation and double glazing for shops, whether owned or rented, and a more targeted approach to retail.”
However, Andrew Goodacre, ceo of the British Independent Retailers’ Association (Bira), welcomed the mini budget: “Reversing or cancelling increases in National Insurance and corporation tax will reduce the cost burden faced by independent retailers. Along with the energy support announced last week, we now hope that retailers can plan and fully focus on this all-important final quarter of the year.
“We also hope the measures introduced to support households will restore consumer confidence and encourage shoppers back to the high streets. Consumer spending needs to increase or many independent retailers and high streets in general will continue to struggle.
Top: Wil Kwasi Kwarteng’s mini-budget restore consumer confidence and encourage High Street spending?