Leading retailers and trade bodies urge tax reforms in letter to Chancellor

Dear Chancellor, 

In recent years, the British public have endured one of the highest periods of inflation in living memory. It has been a difficult time in which the cost of living has soared, particularly for those on the lowest incomes. As retailers, we have done everything we can to shield our customers from the worst inflationary pressures but as they persist, it is becoming more and more challenging for us to absorb the cost pressures we face.

This year government policy has added £7 billion in new costs to retail businesses, resulting from changes to employer National Insurance, higher employment costs, and the introduction of a new packaging tax.  Similar increased costs are also starting to flow through our supply chains. 

Food prices - which had begun to ease - are once again climbing. In its recent Monetary Policy Report, the Bank of England stated that “food price inflation has also picked up by more than anticipated… and is expected to rise further”. It went on to say that “high expected food price inflation is driven partly by higher global commodity prices, but also by labour costs and the Extended Producer Responsibility regulations”.

The British Retail Consortium shares in this analysis and expects food inflation to hit 6 percent later this year, driving up household bills just as winter energy costs start to kick in. The impact is further being felt by communities as retail investment falls and 100,000 retail jobs have been lost over the last year alone. 

Labour’s manifesto made a clear and welcome promise to deliver good jobs and higher living standards but if future policy decisions lead to rising prices and fewer jobs, then those commitments are at risk. Instead, the retail industry is uniquely placed to help deliver the Government’s central economic mission given our presence in almost every community across the UK.

We are committed to investing in our businesses and providing good quality jobs for people at all stages of their career, whether that’s someone entering the workforce for the first time, wanting flexible work to fit around their family commitments or returning to work later in life. We compete fiercely and continue to keep a laser focus on prices and value for our customers, absorbing cost pressures wherever we can.

It is for these reasons we support your plan to reduce business rates on Retail, Hospitality and Leisure. To deliver the improvements to investment the Government seeks, support local employment, and help relieve the pressure on prices, it is essential these changes result in a significant reduction in the industry’s tax burden. No store should pay more as a consequence, with all shops excluded from the new higher multiplier. As we have outlined to your officials, these outcomes can be achieved at no cost to the Exchequer. 

As the Chief Executives of many of Britain’s leading brands, we are determined to help deliver your growth ambitions. However, for this to be possible, the conditions for stable prices, continued investment and sustainable employment must be at the heart of this year’s Budget. We see it as a key moment for the Government to publicly buy into retail and the vital role the industry can play in helping deliver a stronger and more resilient economy for all. We look forward to working with you on this important mission.