Retailers sceptical on Budget plans

The 'Budget for jobs' has done little to help under-pressure retailers keep people in work, said the British Retail Consortium.

Jane Milne, British Retail Consortium business director, said: "The Budget left retailers still facing most of the people and property costs that will prevent new investment and threaten the viability of retailers and their ability to create and sustain jobs.

"Few share the chancellor's optimism that the economy will be growing again by the end of this year. It's crucial retailers are spared new burdens and support for the sector isn't ended prematurely."

The BRC says the chancellor's plan for 'top-up' insurance is too little too late.

Milne said: "A 'top-up' scheme is much needed but this is too little too late. Matching the trade credit insurance that private insurers are willing to provide is vital to helping fundamentally sound businesses weather the recession. But the unannounced detail confirms this safety net will be denied to companies whose cover was cut before April 1 meaning the plight of many is being ignored.

"For retailers to survive and keep people in work they need to keep shelves stocked with the goods customers want. Insurers began removing cover as the downturn started to bite this time last year. The Government's scheme should apply from then."

On business rates, the BRC said the chancellor's re-announcement that retailers will be given the option of postponing part of this April's five per cent annual increase in business rates is welcome, but is not enough on its own.

Independent analysis for the BRC shows planned business rates increases could destroy an extra 19,300 jobs and kill off an additional 582 retail businesses – on top of losses resulting from other causes.

The BRC has calculated that £1.6bn will be added to the £5.45bn retailers paid in business rates in 2007/08 – pushing the retail sector's total rates bill up to £7bn by 2010/11. This 30 per cent increase is the combined effect of annual increases, next April's business rates revaluation, last year's loss of empty property relief and business rates supplements.

Milne said: "Offering extra time to pay part of this year's five per cent annual business rates increase is welcome help.

"The usual formula means the chancellor's prediction that RPI inflation will be minus three per cent in September should reduce next April's annual increase and so make it easier for businesses to decide whether to spread their payments. But retailers still face large increases next April thanks to business rates revaluation and Business Rates Supplements and the chancellor has done nothing to reduce the tax bills from empty property.

"The need to have lots of shops means retail businesses and jobs are more at risk from property cost increases than other sectors. The chancellor should have announced an immediate freeze on all new business rate burdens."

On Empty Property Business Rates Relief, Milne said: "Because of a desperate need to plug holes in the Budget, the government is ignoring the mechanics of the property market at a time when recession means more shops are falling vacant.

"No-one gains by keeping property empty. It's unoccupied because there isn't the demand for it at that time and place. Higher taxes don't conjure up new tenants. But they do pile extra pressure on vulnerable retailers and reduce landlords' scope for offering flexibility to existing tenants – the exact opposite of the government's intention."

On National Insurance, Milne said: "So much for a 'Budget for jobs'. We assume the chancellor's silence means he is going ahead with this tax on jobs. With unemployment mounting, the Government should not be undermining work opportunities by making it more expensive for retailers to take people on."

On car scrappage, Milne said: "While the chancellor announced some encouraging support for energy efficiency and renewables, he hasn't addressed the help businesses and households need to adopt more energy efficient appliances. This would have delivered far bigger savings than the 'scrappage' scheme.

"For example a new fridge uses a third of the electricity of a typical 1980 model and the average fridge in use today is nearly 13 years old with many far older. Encouraging the replacement of old appliances would make a big difference.

"Even if a new car has a better fuel and emissions performance than an old one, once the environmental impact of making it is factored in, there are severe doubts about whether this scheme will produce the environmental gains claimed."

On VAT the BRC said the chancellor should have announced a delay of at least a month in the date for ending the current temporary VAT reduction.

Milne said: "The Budget was the ideal opportunity to announce a delay in the planned VAT reversal date. Achieving this huge repricing exercise for 31 December will soak up resources at retailers' busiest and most important time of year.

"Instead the chancellor appears to have confirmed VAT will rise on that date. The change should be postponed until at least the end of January with retailers given the notice they need."

Milne added: "This year's revised timetable for deciding the annual increase in the National Minimum Wage means it was not announced in the Budget. The government and Low Pay Commission must keep this year's increase below 1.5 per cent to enable retailers to maintain, and where possible, increase job opportunities."