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Budget no help to retailers

22 April, 2009

The Budget, with its increases on fuel, alcohol and tobacco will do nothing to help retailers, according to trade associations representing petrol and convenience retailers. James Lowman, chief executive of the Association of Convenience Stores (ACS) ) said the Chancellor’s failure to act to prevent tax rises will hurt local shops: “At a time when

retailers need radical action to reduce costs, spur investment and create jobs, this Budget contains only crumbs of comfort. The failure to act on the looming threat of next year’s tax hikes in business rates and national insurance will do nothing to bolster local retailers who are crucial to economic recovery.”


"However we are glad that the Chancellor has listened to our call to act to shore up trade credit insurance. The withdrawal or contraction of insurance has put pressure on the cash flow of good retailers who rely on a system of credit to get stock onto their shelves. However we are not convinced that measures go far enough.


“In particular we are concerned that six months is a short window for this to have effect. In light of general forecasts about the recession continuing into next year it would have been sensible to extend this scheme until the end of 2010. We are also concerned that the scheme will not be available to those suffering from having had credit insurance withdrawn already during this recession. Finally it is not clear whether there is sufficient accountability for the insurance companies running the scheme to use it effectively for those businesses that need it most.”


On business rates, Lowman said: “The failure to act on business rates is potentially devastating. In 2010 the revaluation of commercial property is likely to bring dramatic increases of on average 20% in business rates for retailers. This massive jump in costs taken straight off the bottom line will threaten the viability of businesses. We will continue our campaign for action in this area.”

On alcohol and tobacco duty Lowman said: “The increase in duty on cigarettes and alcohol is depressingly predictable for retailers. Every increase in duty fuels the black market and sustains the criminal gangs that thrive particularly in the most deprived communities. This will mean reduced sales for legitimate retailers and less control over who is buying alcohol and tobacco, especially young people."

Sue Robinson, director of the Retail Motor Industry Federation said: "Yet again the government is set to hit the lower paid hardest with the fuel duty rise of two pence per litre in September and the reintroduction of the fuel duty escalator in 2010."

Commenting on the Budget, John Drummond, chief executive of the Scottish Grocers Federation (SGF) said: “There is little in this budget to boost business within the convenience store sector. The 2% increase in alcohol duty is unwelcome news for retailers and consumers neither of whom needs another tax increase during an economic slowdown. The increase in fuel duty by 2p per litre from September will increase costs for all retailers and for rural and remote retailers in particular.


“Doubling of the capital allowance for investment in 2009/10 is unlikely to have any benefit for the vast majority of independent convenience stores as the threshold for qualification is beyond their reach.


“With a lack of measures to reduce taxation on businesses in this budget a reassurance from the UK Government that the national minimum wage will remain at its current level until the economy improves would be welcome.”