Budget tax hikes branded a ‘land grab’ by retail tech boss
Chancellor Rachel Reeves’ Budget was a “land grab” that demonstrated “short-term thinking” and will hamper the already struggling retail sector, the UK boss of a retail tech firm has said.
Roy Horgan, who is the UK chief executive of Euronext-listed Vusion Group, said rises to employer National Insurance contributions (NICs) would be inflationary and prevent them from giving as many staff quality jobs.
“Firstly, moving things like NICs up is inflationary, and [second] if the retailers bring more people into the tax bracket through PAYE, the exchequer does better anyway,” Horgan told City PM in an interview.
“I think it’s a land grab and it demonstrates short-term thinking,” he added before branding the above-inflation hike to the living wage as “a stealth tax”.
Horgan’s comments add to the growing backlash from the business community at several of the key revenue raising measures unveiled in Rachel Reeves’ maiden Budget.
The retail industry, which Vusion supplies with digital shelf labels, has been a particularly loud voice in the retaliatory push due to its reliance on low paid and part-time staff, who the reforms to NICs and the living wage made considerably more expensive to hire.
Last week, the British Retail Consortium (BRC) orchestrated a letter to the Chancellor signed by bosses at over 80 of the UK’s largest retailers, which warned that job losses and price hikes are “a certainty” unless the government reconsidered the speed and cadence of her reforms.
Helen Dickinson OBE, the chief executive of the BRC, told City PM that Labour’s relationship with the retail industry was at a “critical point” and that the government risked “unintended consequences” if it moved too quickly with the reforms.
But rather than predicting a swathe of job losses as forecast by major retailers in the BRC’s letter, Horgan said that the changes were likely to result in retailers frantically looking to find efficiencies elsewhere.
“On Budget day I sat down in front of 30 independent retailers, which are probably the heartbeat of retail because they own their PNL [profit and loss],” he said. “[Many of them] can’t operate the store on any fewer people, so the only way they can handle these changes is by asking these people do do more, or take time out of their day to make their job easier.”
Horgan’s comments come despite there being a chance that UK retailers will turn to Vusion, which has a market capitalisation of €2.2bn (£1.8bn) and whose digital labelling technology uses cameras to monitor stock levels and adjust prices based on demand and stock levels, to aid their own efficiencies.
“Retailers understand that the cost of labour is going up because energy and taxes are going up, but the cost of technology is going down,” he said. “The reality is that retailers will not remove one person from the store, but what they will do is take tasks out of their hands that are non-value add. And that’s what we’re seeing.”