By Ellen Davnall
With the Federation of Small Businesses today calling for this month's Budget to take into account small enterprises' needs for stability for growth, retailers have also been making their wishes known. Their emphasis on longer notice of financial changes affecting the retail sector, and more predictable rises in rates and taxes is, however, at odds with a report which suggests small to medium retailers in Britain are more concerned with short-term sales than establishing strategies for the future.
The British Retail Consortium (BRC) called for the Chancellor, George Osbourne, to spare retailers from fresh burdens, stating that the sector was still struggling to absorb the costs of earlier legislative changes.
Such costs include last October's National Minimum Wage increase, January's VAT hike, and the anticipated rises in Business Rates and National Insurance in April. Further in the future, the Minimum Wage is set to increase again in October 2011 by an unspecified amount, with a new Carbon Reduction Committment Tax in April 2012. The BRC estimated the total cost of these and other measures at £670 million.
In its submission to the Chancellor ahead of the Budget, the BRC pointed out that 80 per cent of the new jobs announced at the Prime Minister's January Jobs Summit were in retail, showing the sector is central to growth and jobs. In particular, one third of retail staff are aged under 25 so the sector has a pivotal role in providing work for young people - who face some of the biggest challenges on the jobs market.
"Retailers accept ‘we are all in this together' but they are already ‘in this' more than many. The sector is not asking for handouts but is saying any new impositions will undermine its ability to maintain and create jobs, costing the Exchequer," said a statement from the BRC.
BRC Director General Stephen Robertson said: "Our absolute priority is to be at the centre of the recovery — to be able to go on maintaining and creating jobs. Sadly, a million young people are without work. Retail already employs one million young people, starting their careers, and we'd like to be able to take on more.
"While it may be true that ‘the broadest shoulders should bear the biggest burden', the retail sector, which operates on slim margins, is already seeing its load increase sharply. New impositions can only hinder retail's ability to invest.
"The Prime Minister's Jobs Summit showed just how reliant on retailing this year's economic growth will be. We're not asking for handouts but we do need an environment that eases costs, supports job creation and boosts consumer confidence."
This statement from the BRC comes at the same time as a new survey by FileMaker which suggests that small to medium British retailers are thinking more about short term sales than long term strategy and planning. The FileMaker Insight Awareness Report shows that UK retailers are more interested in gaining insights from data that aids customer service (65 per cent) and sales and marketing (62 per cent) rather than risk management (23 per cent) or strategic business planning (22 per cent).
“With the focus placed squarely on gathering marketing and sales information, it looks like UK retailers are treading water to some extent; prioritising tactical survival techniques over strategic business planning,” said Tony Speakman, Director, FileMaker Northern Region.
This short-term prioritisation may be the result of factors outside of retailers control, however, as suggested by the BRC's 20 point plan for a retail-led recovery, in which they call for a variety of measures to help retailers plan for rises in rates, taxes and wages more in the long term. The BRC, like the Federation of Small Businesses, clearly sees stability as the key to the recovery.
The BRC's 20 point plan, which was submitted to the Chancellor, includes calls to:
- Help employers plan for the future by providing for 18 months notice of all future National Minimum Wage increases, rather than the present six months. This October's increase should be no more than 1.7 per cent and future increases should not exceed long term average earnings growth.
- Make future Business Rates increases more predictable and affordable by basing them on the Consumer Price Index (as used for pensions) or an annual-average of the Retail Price Index.
- Reduce the impact of rising transport costs on household finances, shop prices and businesses by suspending the fuel duty increase due in April and waiving commercial vehicle road tax for a year. This could be funded from tax windfall income the Government is receiving as a result of higher fuel prices.
- A moratorium on new employment legislation until growth is firmly establishment. Now is not the time to add to employers' costs by, for example, complicating maternity/paternity leave rights.
- Ensure localism plans clearly define where local decision making begins and ends so it doesn't get in the way of business growth and keep costs down by sharing good practice.