By Daniel Hunter
Retailers make an essential contribution to investment, jobs and growth, said the British Retail Consortium (BRC) as it published new pre-Budget research. The Chancellor can help maintain that contribution by reducing business costs and re-building consumer confidence.
The independent study produced by Oxford Economics for the BRC, shows retailers' operating costs have increased by a fifth since 2006 and it is centrally-driven costs that have risen most rapidly.
Costs of doing business have shot up by an astonishing 21 per cent - £20 billion — since 2006. That took annual operating costs from £96 bn. to £116bn, according to the latest data. Over the same period retailers sales values increased by just 12 per cent. Cost increases on that scale are forcing store closures and curtailing job creation.
The research also demonstrates that, while many private sector, market-sensitive, costs such as rents, have responded to economic realities, centrally-driven costs such as business rates and utility bills have gone up sharply.
At a time of weak consumer confidence and falling disposable incomes, recent high-profile retail administrations indicate the effect that added pressure is having.
In its submission, ahead of next month's Budget, the BRC is proposing that the Chancellor helps consumers and cuts business costs to support jobs and growth. We believe the measures needed are:
Support Consumer Confidence: Speed up progress towards the target £10,000 per year personal allowance.
Control Central Costs: Freeze Business Rates in April 2013, then deliver a system for the future that produces increases that are more affordable and predictable. Using an annual average of CPI, rather than a single month's RPI, would achieve this.
Apply ‘One in, Two Out' to regulation and ensure the regulations being scrapped benefit the same sector that is suffering the new rules being imposed.
Apply a ‘growth test' to new regulation to stop growth-inhibiting regulation.
Preserve and Create Jobs" Introduce a time-limited National Insurance holiday for all companies which take on an unemployed young person.
High Streets: Provide central coordination on implementation of the Portas Review recommendations. Implement parking performance league tables now.
"Retail is a major force for good. It's the UK's largest private sector jobs provider and has been a powerhouse for investment and growth, even during the relentlessly tough times of the last few years," British Retail Consortium Director General Helen Dickinson said.
"There were welcome measures in the Autumn Statement and the Chancellor has it within his gift to do a great deal more. Our figures show dramatic increases in operating costs, often as a direct result of Government decisions.
"Consumer spending accounts for two thirds of all expenditure in the UK. It must recover before the economy can, yet 2013 has begun with high-profile evidence that demand is weak and a painful restructuring of the UK retail industry is underway as customers change the ways in which they want to shop.
"The Chancellor has the opportunity to improve the business environment as a way of re-establishing and maximising retail's essential contribution to recovery. We're setting out priorities to help achieve that most effectively."
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