Lack of energy support in Budget sparks dismay among retail industry

A lack of support for businesses on skyrocketing energy prices in this year’s Budget has attracted the ire of the retail industry.

In the Budget, the Chancellor of the Exchequer Jeremy Hunt confirmed that the current level of support with energy bills would be maintained, despite numerous calls to increase the aid to small businesses that have seen their energy bills increase.

Under the Energy Bills Discount Scheme, the government is providing a discount of 1.9p per kWh for electricity, which according to Association of Convenience Stores (ACS) research will reduce an average eligible convenience store’s energy bill by around £1,520 for the year. The ACS has warned that unless more support is provided, up to 7,000 stores could be forced to close.

ACS chief executive James Lowman condemned the Chancellor’s failure to put in place meaningful support. “A Budget focused on growth and investment will come as no comfort to those who will have their entire profit margins wiped out this year by excessive fixed energy contracts,” he said.

“Convenience stores have been left out in the cold by the Chancellor, being left to face crippling energy bills by themselves and putting thousands at risk. Difficult decisions will have to be made in the coming months by independent retailers about the future of their businesses, which will have a negative impact on investment and reduce the number of available jobs in communities, all while bolstering the profits of energy companies.”

The Fed’s National President Jason Birks also expressed disappointment at the lack of support.

“I and other trade associations wrote to the chancellor and the business secretary just last month imploring them to provide the necessary help for struggling small businesses. It is, therefore, extremely disappointing that our calls for assistance have not been answered.”

Chris Brook-Carter, chief executive of the Retail Trust, was more receptive to the energy bill measures. “The Retail Trust has backed calls by Martin Lewis to postpone the 20% rise in the Energy Price Guarantee and we believe today’s announcements should go some way to reassuring anyone worrying about rising energy bills, or having to cope with sky-high childcare costs. We’re seeing a growing number of retail workers applying for financial aid from the Retail Trust or visiting our website to access financial health support, so we understand the pressures that millions of working people are facing right now when it comes to dealing with these kinds of costs.”

Increased duty on tobacco and alcohol also came under criticism from the sector.

Birks warned that duty increases in these categories lead to an increase in illicit trading, which again is harmful to honest shopkeepers and fuels organised crime.

“The chancellor has shown a complete disregard for shops that are the lifeblood of their local communities,” he said. “I make no bones about it - we will see many forced to close their doors for good as businesses become unviable in the current economic climate.”

The alcohol tax increase was slated by suppliers as well. Managing director at Diageo GB Nuno Teles said: “This decision is a hammer blow for pubs, drinkers and for Scotch, a UK homegrown industry supporting tens of thousands of jobs. We urge the Chancellor to reverse this punitive and inflationary tax hike.”

Chief executive of the Federation of Wholesale Distributors (FWD) James Bielby warned of the impact on the convenience channel. ”The duty cut for draught product is welcome but the broader alcohol stealth tax introduced by the Chancellor will harm the convenience sector, ultimately raise the price of a pint in pubs and serve to deepen inflation and the cost of living crisis.”

Smoking lobby group Forest labelled the increase of duty on tobacco as “heartless and cruel”.

Simon Clark, director of the smokers’ group Forest, said it would push consumers towards the illicit trade. “Punishing smokers for their habit during a cost of living crisis is heartless and cruel. It discriminates against poorer smokers and will drive many more consumers to the black market.

“This is bad news for legitimate, law-abiding retailers, and bad news for the Treasury which could lose billions of pounds in revenue if more smokers buy their tobacco from illicit traders.”

Other announcements in the Budget included a freezing of fuel duty for another year which was welcomed by the Petrol Retailers Association Executive Director Gordon Balmer. “Petrol and diesel prices are still extremely volatile due to the ongoing war in Ukraine. Many motorists will breathe a sigh of relief at the Chancellor’s decision to extend the fuel duty freeze and maintain the 5ppl cut,” he said. “We welcome the Government’s commitment to keep fuel duty rates under review and hope that they will continue to do all they can to ease the burden of high energy prices on motorists. As always, our members are committed to keeping their communities fuelled and fed.”

The FWD’s James Bielby also praised the fuel duty freeze. ”The extension of the 5% fuel duty cut is a welcome move. This will save wholesalers significant sums against the challenging backdrop of high fuel prices owing to the Ukraine conflict.”