Retailers left wanting more from Rishi Sunak’s Spring Budget 2022

24 March 2022, 07:30 AM
  • Chancellor Rishi Sunak announced the annual Spring Budget yesterday, but the retail industry has been disappointed with the measures put in place
Retailers left wanting more from Rishi Sunak’s Spring Budget 2022

Independent retailers were left disappointed yesterday as the chancellor’s Spring Statement didn’t go far enough to help small businesses recover from Covid restrictions, effectively signalling the end of state support for the sector.

In response to this statement, the British Independent Retail Association’s (Bira) CEO Andrew Goodacre said: “The Spring Statement is underwhelming for indie retailers with limited help on rising costs to business. Whilst we support cuts in fuel duty and an increase in NI allowance, this is nowhere near enough to offset 300% increases in energy, 100% increase in rates and double-digit increases in the cost of employment. The 1p cut in income tax is a classic diversionary tactic designed to hide a statement that is short on support for business.

“Increases in product costs are easier to pass on to consumers, but these rising overhead costs are not which ultimately means a very difficult year for small retailers,” he added.

Food costs and inflation
Karen Betts, the Food and Drink Federation’s (FDF) chief executive, pointed out that the measures will also not help rising food costs and inflation: “Today’s ONS figures show prices for food and non-alcoholic drinks rose at the fastest rate since September 2011. This reflects the significant rises in ingredient, raw material and energy costs that food producers have been facing for many months now. All indications are that food price inflation is some way from peaking, and we expect prices to continue to rise for some months to come.

“We need the government to consider other measures to cut the cost of doing business, to help stall rising prices, and stimulate growth such as removing complexity and cost from upcoming regulations. By establishing a National Food Security Council, the government can help protect the resilience of the UK’s food producers and our food supply by reacting in real-time to disruption as a result of turbulence in global commodity markets and international supply chains.”

Moreover, those fine food businesses with hospitality were let down by the VAT hike which will see hospitality businesses revert back to the usual VAT rate of 20%, from the reduced rate of 12.5% during the pandemic.

According to Kate Nicholls, UKHospitality CEO, the failure to keep VAT at the reduced rate was a “huge missed opportunity”.

She revealed on social media: “Increasing VAT on hospitality to 20% while energy and food bills are at record highs will see today’s inflation figures soar and is a huge missed opportunity to ease those pressures across the economy and accelerate growth and recovery.”

Small businesses applaud statement
However, the statement did implement something that the industry was calling out for: an increase in Employment Allowance. 

Responding to the Spring Statement, Martin McTague, national chair of the Federation of Small Businesses (FSB), said: “We are very pleased to see the Chancellor adopting our top ask for this Spring Statement: updating the Employment Allowance to help small employers with national insurance costs.

“We originally put forward the Employment Allowance as a targeted measure to help small firms, and it has now been expanded three times since its creation. Together with a cut to fuel duty, these measures will provide crucial breathing space for our embattled small employers. 

“This Spring Statement marks a good starting point, with welcome measures on business rates, net zero and energy investment taking effect next month. We look forward to working with the Chancellor on his new tax plan. Achieving the new culture of enterprise vision he rightly aspires to, alongside levelling up aspirations, will mean putting community small firms and sole traders front and centre of reforms.

“That means taking more of them out of the business rates system, protecting SME R&D investment incentives and delivering on commitments to end an endemic late payment culture that destroys thousands of firms a year.” 

Only time will tell how Rishi Sunak’s spring measures affect the fine food sector, but with continued uncertainty in Eastern Europe and Brexit fallout causing issues across the entire supply chain, there are further challenges ahead.

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