More than 80 retailers co-sign BRC letter to Chancellor

The CEOs of 81 retail businesses in the UK, including Whittard of Chelsea, Sainsbury’s and Ocado have this week signed a letter, sent to Chancellor Rachel Reeves, airing their collective concerns over the impact of the 2024 autumn Budget.

Released by the British Retail Consortium (BRC), the letter is a damning indictment of the new Government’s proposals, which leaders say will have a significant impact on inflation, employment and investment in the UK.

“Retail is in every community and is vital to the socio-economic fabric of the UK,” the letter begins. “It is the largest private sector employer, with three million direct jobs and 2.7 million more in the supply chain contributing over £100 bullion per annum to GDP. This scale and reach means the industry can be a partner to Government, supporting the reinvigoration of high streets, creating jobs all over the country, and supporting the Government’s ambitions for growth.”

The co-signers said they appreciated the Government’s focus on improving the nation’s current fiscal situation, investing in public services, and recognised the supporting role businesses have to play, but added the, “sheer scale of new costs and the speed with which they occur create a cumulative burden that will make job losses inevitable, and higher prices a certainty”.

In a table, the letter sets out the estimated additional costs of the Budget to business in 2025, demonstrating the impact of the NIC threshold change (saying it is “particularly acute” given retail employs large numbers of people in entry-level and part-time roles), alongside other incoming regulations, such as the implementation of new packaging levies. It estimates the rate increase to 15% will cost £0.57 billion, the threshold change £1.76 billion, the National Living Wage increase £2.73 billion, and Packaging Levy £2 billion – rounding up to £7.06 billion of extra burden on retail from spring next year.

“This will also affect our suppliers, increasing costs that retailers pay for goods and services,” the letter added.

On business rates, the co-signers said while the 30th October Discussion Paper recognised the need to support retail and hospitality, in reality retailers’ collective bills could rise by £140 million in April 2025 due to the inflationary uplift and a reduction in the existing discount for those that receive it.

“We are concerned the proposals merely redistribute rates within the industry and would see many retailers’ bills significantly increase,” they said. “Changes must lead to a significant, permanent reduction of rates bills for all retail properties if they are to offset the effects of the extra costs above in any meaningful way.”

A grim picture of the future of retailing should the Government’s changes go ahead is painted by the 81 signatories, who added the industry is already one of the highest taxed business sectors, alongside hospitality, paying 55% of profits in businesses taxes, while remaining competitive, with margins of around 3-5% ensuring value for customers.

“For any retailer, large or small, it will not be possible to absorb such significant cost increases over such a short timescale. The effect will be to increase inflation, slow pay growth, cause shop closures, and reduce jobs, especially at the entry level. This will impact high streets and customers right across the country. We are already starting to take difficult decisions in our businesses, and this will be true across the whole industry and our supply chain.”

The BRC and its cosigners have set out a series of proposed ‘next steps’, saying they welcome the opportunity to meet with Government to work together on a solution, suggesting that by adjusting the timings of some of the changes, businesses could adjust and mitigate their effects on customers.

Measures they ask for include phasing the introduction of the new National Insurance lower earnings threshold, delaying timelines for packing levies, and revisiting the business rate proposals announced at the Budget.