Retail chiefs warn Chancellor of the dangers

SCOTTISH retail chiefs are among 80-plus industry leaders warning Chancellor Rachel Reeves that her budget will have dire consequences.

They told her that the changes to employers’ National Insurance contributions (NIC), national living wage (NLW) increase and packaging levy will mean the sector’s costs could rise by up to £7billion a year.

And in a letter sent to Reeves by the British Retail Consortium members, they warned: “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.”

Signatories included the bosses of the Scottish Grocers’ Federation (SGF), Spar Scotland, One O One and Scotmid Co-op, alongside chiefs of supermarkets Asda, Morrisons, Sainsbury’s, Aldi and Lidl.

They added: “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 letter concluded by asking Reeves to work with them to come up with solutions such as adjusting the timings of some of the changes.

David Lonsdale, director of the Scottish Retail Consortium warned Scotland’s retailers would face a £190million increase in their tax bill alone.

And the SGF claimed the NIC and NLW hikes could cost Scottish convenience stores tens of millions of pounds that they cannot afford.

The organisation calculated that the changes would add about £2,400 a year to the bill for employing a full-time member of staff.

The SGF said a survey for its annual True Cost of Employment Report showed that 74% of retailers were now working more than 65 hours a week just to keep costs down.

SGF head of policy and public affairs Luke McGarty said: “There is no doubt that convenience stores employing local staff will have to think twice before taking on anyone new or increasing staff hours.

“In some cases, it could be the final straw, pushing retailers to reduce staff or even close the doors for good.”

Blantyre retailer and national president of the Fed Mo Razzaq said that while independent retailers provide employment – often giving young people their first jobs – the NIC and NLW rises were a step too far for hard-pressed small businesses.

Razzaq argued: “There is no easy way for small retailers to combat these increases. As so many of the products that convenience store owners sell are price marked, we cannot pass these costs on to our customers.”

Putting duty up by 10% on hand rolling tobacco, a flat rate duty on all vaping liquids, a one-off increase in tobacco duty and increases on alcohol duty rates were further blows to independent retailers, he said.

And while the Petrol Retailers Association welcomed the continued freeze on fuel duty and extension of the temporary 5p cut for another year, it voiced concerns about many of the other tax rises.

The Scotch Whisky Association warned the duty hike would damage the industry and Scottish economy. And the UK Vaping Industry Association said the new vape tax would deter smokers from switching to  vaping as a way of trying to give up their habit.