The last budget of
this Parliament must concentrate on public spending cuts, rather
than tax increases, say the British Retail Consortium (BRC).
Ahead of the next Budget, scheduled for 24th March 2010,
the BRC's submission to the Chancellor makes clear retailers
believe Government moves to deal with the budget deficit should
prioritise cutting non-essential public spending over tax rises –
or risk a return to recession.
The BRC's Budget submission, published March 1st, says: "The key
challenge for the Government in the Budget is to outline a credible
plan for addressing the fiscal deficit without precipitating a
‘double dip' recession... significant focus must be on driving
efficiency and productivity in the public sector…there is a need to
review all options, including ceasing areas of activity …and
de-commissioning services that Government can ill afford to
continue."
Stephen Robertson, British Retail Consortium Director
General, said: "The size of the country's deficit means
action must be taken. To nurture our fledgling recovery, the main
tool for dealing with the deficit has to be cutting non-vital
public sector spending.
"Some tax rises maybe inevitable, but no Government should rely
on tax hikes to reduce borrowing. The increases would have to be so
large that customers' ability to spend would be wrecked – risking a
double dip recession."
In addition to tackling the public finances, the BRC Budget
Submission identifies other key themes to help retailers play their
part in achieving a return to sustainable economic growth.
These include;
1) People - Reducing employment costs
Retailing is one of the UK's biggest employers with nearly three
million people working in the sector. According to the BRC,
retailers' ability to maintain and create jobs risks being
undermined by increases in employment costs. The proposed one per
cent increase in National Insurance, for example, will cost
retailers an extra £220 million. This equates to almost 15,000
employees on an average retail wage.
The BRC is calling for:
• The one per cent
increase in National Insurance planned for 2011 to be
scrapped.
• This year's National
Minimum Wage increase to be no higher than one per cent.
2) Location - Reducing property costs
The need to be close to customers’ means the retail sector
requires the right premises in the right locations. But this means
they are disproportionately affected by property cost rises.
Retailers already pay a quarter of the £23 billion in business
rates in England – more than any other sector. This April, as a
result of the five-year revaluation, retailers across the UK face
hefty increases.
In addition, many retailers will also have to pay the deferred
part of the inflation-busting 2009 increase postponed from last
April. This is on top of the Business Rate Supplement (BRS)
introduced in London to pay for Crossrail.
Last year, local authorities in England and Wales were given the
power to add extra costs to business rates through BRS. The BRC has
continually warned safeguards in this area need to be
strengthened.
The BRC is calling for:
• Affordable increases
in business rates
• Businesses affected by
BRS to have a legal right to vote down any BRS plans that will not
deliver adequate local economic benefits
• An extension to the
temporary Empty Property Rate Relief, allowing more empty
properties to qualifyfor an exemption to business rates until
2012
Stephen Robertson, British Retail Consortium Director General,
concluded: "Retailers are vital to jobs. Retailing is the UK's
largest private sector employer. We'll be leading the UK into
recovery. It's crucial this Budget gives us the support we need to
maintain and create jobs and doesn't pile on damaging new
costs."