Following a business campaign led by the British Retail Consortium (BRC), the Chancellor Philip Hammond has announced in his Budget of November 22 2017 that the move from RPI to CPI indexation will be brought forward by two years to April 2018. The new measures could help British businesses save £2.3bn over the next five years.
The Chancellor also said that following the April business rates revaluation, future valuations will be every three years, rather than five as they are now, helping to prevent steep rates rises in future. 100% business rates retention are to be trialled in London in 2018.
Senior retail figures, including B&Q boss Christian Mazauric, Carpetright CEO Wilf Walsh and Holland & Barrett head Peter Aldis, also put pressure on the Chancellor to deliver “a shoppers’ Budget” and take serious measures to curtail the immense pressure posed by business rates on the nation’s retailers.
Helen Dickinson OBE, Chief Executive of the BRC, comments: “This is a hugely welcome and positive move. From being caught in a web of competing pressures from all parts of the economy, limiting the scope for action, it’s clear that the Chancellor has listened to the retail industry and the growing chorus from across business and commercial life who have spoken up in favour of action to mitigate rising rates bills. Crucially, this relief will unleash investment that retailers want to direct towards the needs of their customers. This will be particularly critical at a time when shoppers’ disposable income is being squeezed further and the growth projections for the economy have been downgraded.
“Introducing three yearly revaluations is also a positive move to improve fairness of the system. These are encouraging first steps, so now is the time to commit once and for all to putting the rates system on a more affordable and sustainable footing, to support local communities, shops and jobs. We are keen to work with Government to deliver on that.”
Mark Easy, Business Sector Specialist at NFU Mutual, also commented on the Budget implications for retailers, saying: “It is promising that concerns about the unfairness of business rates are being listened to, although further reform to the business rates system is needed to provide retailers with the security they need. Bringing forward the switch to the CPI inflation index to April 2018, and the ability for businesses to have rates revalued, will go some way to improving the fairness of the system in a measure that the Chancellor says will save businesses £2.3bn.
“Pubs with a rateable value of under £100,000 will welcome the continuation of the £1,000 discount rate for a further year, but they alongside retailers and other businesses under the current rating system will be seeking further assurances to give them confidence for the medium to long term future.”
Commenting on the proposed crack down on online VAT evasion, he added: “This is the first step in creating a more level playing field for bricks and mortar retailers. “Those running small retail businesses will heave a sigh of relief that despite speculation, they won‘t be faced with expensive accounting admin as the Chancellor has decided to keep the threshold for VAT registration at £85,000, in recognition of small businesses as the backbone of the country’s economy.”
The Chancellor also announced he would help create “a prosperous and inclusive economy” with a rise in the national living wage from £7.50 per hour to £7.83 in April. The personal tax allowance will rise from £11,500 to £11,850 and the higher-rate threshold will be rise to £46,350.
The BRC also welcomed the Government’s approach to the National Living Wage. Helen Dickinson said: “Wage growth in retail continues to outpace the economy-wide average. Maintaining productivity gains remains crucial to sustaining this wage growth as employers contend with recent and upcoming changes to statutory employment costs. Therefore, it’s important that future increases continue to be moderate to reflect this and are subject to a fully independent Low Pay Commission.
“We are also encouraged by the Chancellor’s commitment to keep under review the flexibility on how Apprenticeship Levy funds can be spent. Without such flexibility the retail industry will not be able to play their part in supporting the government to meet their three million target.”
“The announcement of an investigation into how a tax on single use plastics can reduce waste is interesting. It begs a number of questions about how the scope of any taxes might work, the timeframe for introducing them, what Ministers hope to do with the receipts, and the impact on consumers and businesses.
“We look to Government to ensure this investigation takes a comprehensive approach to waste, recycling and the circular economy, of which single use plastics and drinks bottles are but one component. Decisions on specific products need to be taken in the context of the circular economy where all resources are valued and reused. We also still await Defra’s 25 Year Environment Plan and a waste and resources strategy. What is needed is a broad, coherent approach rather than numerous piecemeal announcements and initiatives.”
