James Lowman: ACS in action

All posts from: July 2015

Counting the cost of the Budget

Posted by: James Lowman Mon, 13 Jul 2015

The last week has been – in political terms at least - one of the most difficult for local shops in recent memory. Plans announced in the Budget to liberalise Sunday Trading rules and introduce a Living Wage of £7.20 an hour in April 2016 rising to at least £9 an hour in 2020 have the potential to be incredibly costly and damaging to the sector. We spent much of the week speaking up for retailers in the media, but for all the soundbites, if we want to argue against these measures we need robust research on how these changes will affect you.

Our work with the University of Oxford’s Said Business School over the last two years has allowed us to develop a model of the pressures facing different types of store in the sector. Using this model, we are able to look at the potential impact of the introduction of a living wage and Sunday trading deregulation in much more detail. For example, the introduction of the living wage is likely to cost larger convenience stores on average £8,100 a year, while even smaller urban stores will see an increase in staff costs of over £2,100 on average.  The Chancellor also announced an increase in the employment allowance to offset the costs of the living wage, but the allowance is only increasing by £1,000 and it is for the business as a whole – retailers who own more than one store will get proportionately less benefit from this measure, and very few retailers will be net better off from these two changes combined.

On Sunday Trading, our research during the Olympics showed that many convenience store sales took a 20% hit on Sundays where larger stores were open. This is likely to cost stores trading on suburban parades and estates over £51,000 in lost sales a year. At a time when many of these stores are operating on the edge of profitability, liberalisation of Sunday Trading rules alone has the potential to put many businesses in the red.

This Budget was one full of ambition from a Chancellor with one eye on the house next door. However, his long term ambitions have left small businesses short changed and it’s up to us to ensure that government knows the damage that his plans could do to the UK’s 50,000 convenience stores, and the 386,000 staff who rely on these stores for jobs.

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