Budget reactions: business rates cut to boost indie retailers

Small business groups and food and farming leaders welcomed a decision to temporarily reduce business rates by 50%, announced in Rishi Sunak’s Autumn Budget.

Shops and restaurants will benefit from the one-year reduction in business rates as it was announced that they would be able to claim a discount of 50% up to £110,000 on their bills. The planned 2022 annual increase in business rates will also be scrapped for the second year in a row.

Mike Cherry, national chair of the Federation of Small Business (FSB), said the Government was “changing the system so it stops hitting small firms that invest to make their premises more sustainable with higher bills”, and NFU president Minette Batters said the move would support rural businesses such as farm shops recovering from the impacts of Covid-19.

“The Budget delivered small and medium-sized enterprises a boost today, at a difficult time when they’re grappling with price rises, labour shortages and supply chain issues,” added Gregory Taylor, partner at accounting firm MHA.

More to be done

However, with inflation and tax hikes on the horizon, he said “clouds are gathering” over the industry. While he welcomed the moves towards business rates reform, investment in skills development and expanding the British Business Bank, which supports regional funds that help small businesses, he said, “Much more will be needed to support small employers in the months ahead. Our call for an increase in the Employment Allowance to £5,000 would have made a real difference to efforts to increase wages, retain staff and create jobs as we head into the critical festive season.”

Helen Dickinson, CEO of the British Retail Consortium (BRC) agreed that the announcement “falls far short of the truly fundamental reform that is needed and was promised in the Government’s 2019 manifesto”.

The cancellation of the planned rise in fuel duty will also keep costs down for SME retailers, though the rise in the National Living Wage will put pressure on prices. The industry also welcomed investment in lorry driver facilities around the UK. “We hope this makes lorry driving a more attractive career to those who may be considering it, as well as helping to retain those hardworking drivers already in post,” said the BRC’s Helen.

Farming needs “longer-term roadmap”

The farming industry welcomed temporary increases to the investment allowance for plant and machinery, but the NFU’s Minette Batters said, “It was disappointing not to hear anything from the chancellor on Government plans to develop its export strategy to help UK farmers grow their markets overseas, including funding for dedicated agricultural counsellors, or any details on overhauling government procurement practices to increase the provision of fresh and nutritious British food in our schools, hospitals and other public sites.

The lack of focus on net zero funding was also a “missed opportunity”. However, she added that “businesses will benefit from business rates investment relief for green technologies, which is a positive move to support continued investment in renewable energy and may help in UK farming’s ambition to achieve net zero by 2040. We will now need to see more detail to be certain about the impacts this will deliver on farm.”

A mixed bag for food manufacturers

Ian Wright CBE, chief executive of the Food and Drink Federation, said food and drink manufacturers and the farm to fork supply chain would “applaud the moves made by the chancellor in the direction of a higher skilled, more productive UK economy”. 

“As the UK’s largest manufacturing sector, with a footprint in every constituency, food and drink is ideally placed to contribute,” he continued. He welcomed the business rates cut as well as the simplification of alcohol duty and support for research and development. “On the latter we will campaign hard to ensure it is fairly shared out so that it creates step change in how smaller food and drink businesses innovate.”

However, he added that the Budget did little to address labour shortages and rising inflation. “Given the pressures they are facing, many manufacturers will simply have no choice but continue to pass costs down the chain,” he said.