Spring Statement: Reeves’ pro-growth message ‘at odds’ with reality, say retailers
The pro-growth message delivered by the Chancellor at the spring statement is at odds with the high-cost reality faced by businesses, retail and hospitality leaders have said.
Leaders in the sector have called on the Labour government to deliver urgent reform to the business rates system and slash tax and policy barriers to hiring to enable them to pursue growth.
In her statement to the House of Commons, Rachel Reeves defended her government’s high tax and spend policies and insisted the economy “is growing” despite the Treasury watchdog slashing growth forecasts.
The British Retail Consortium (BRC), which represents retailers, said businesses’ priority should be protecting jobs but they are unable to do so because of the high burden posed by business rates.
Helen Dickinson, the BRC’s chief executive, said: “The Chancellor spoke about boosting investment in communities. Our high streets are the backbone of local economies, yet business rates continue to undermine their viability.
“While [the] government has taken some steps to fix the current system, it is broken and must be overhauled entirely to reduce the burden on the high street once and for all.”
Last month, the boss of northern pub chain Admiral Taverns told City PM business rates will “kill off the high street” unless the Treasury commits to root-and-branch reform of the levy.
High taxes and rising employment costs
Kate Hayward, UK managing director at small business accounting software provider Xero, said the Chancellor’s messaging felt “at odds with reality,” with many business leaders having hoped in vain for more focus on small firms.
Retailers have been hit by rising employment costs in recent months and are now being forced to adapt to Labour’s new workers’ rights reforms, which trade bodies have warned could force bosses to cut down on hiring.
More than half of chief finance officers at retail firms told the BRC they plan to reduce working hours due to the new legislation and 48 per cent said they will slash jobs altogether to manage costs.
Jon Hendry-Pickup, chief executive of family resort chain Butlin’s, said employment costs are hitting hospitality firms too.
He said: “Hospitality and leisure businesses want to invest and hire, yet year-on-year cost pressures are reaching a tipping point.
“If the Government wants growth in every part of the UK, it needs to rethink how some sectors are carrying so much of the burden.”
John Dickie, chief executive at trade body BusinessLDN, said the Government is right to focus on growth but stressed small retailers cannot afford to wait much longer for results.
He said: “This approach is starting to bear some fruit with Office for Budget Responsibility forecasts showing more breathing room against the Government’s fiscal rules.
“But growth is set to remain anaemic over the coming years and the Chancellor needs to redouble her efforts to get the economy moving quickly.