Healey unveiled a raft of modest but useful measures for businesses and households
However package of measure is unlikely to make good on ‘renaissance’ of high streets pledged by Prime Minister
Chancellor John Healey delivered his maiden UK Budget against a difficult economic and fiscal backdrop, with little room for manoeuvre. The UK Government has not run a fiscal surplus for a quarter of a century. That looks unlikely to change soon.
Holding the Budget much earlier than last year was astute. It largely avoided the palace intrigue and drip-feed of rumour and speculation that dogged his predecessor’s last Budget and dampened retail sales during critical festive trading. Instead, Mr Healey was able to point to an uptick in the forecast for economic growth.
He unveiled a raft of modest but useful measures for businesses and households.
Suspending import tariffs on over one hundred food lines will make a limited and small difference to shoppers’ baskets – in stark clear contrast with the undeliverable statutory food price cap Scottish Ministers seem intent on introducing.
His predecessor’s inaugural Budget in 2024 contained an enormous hike in employers’ national insurance contributions. This went down like a lead balloon and continues to cost Scots retailers £190 million each year, contributing to elevated prices. It was little surprise that retail’s number one plea to Mr Healey was to avoid adding to the tax burden retailers face. To his credit he listened, with no new taxes on the industry unveiled this time around.
That said, whilst the Budget did extend business rates relief for the very smallest shops in England, rates for other stores there will rise. There was little in the Budget to reduce the cost of operating a retail business here in Scotland. Indeed, the cost of employment is set to climb further with another above-inflation rise to the statutory minimum wage. It’s risen by 43 per cent over five years and next April’s increase is five times the current rate of growth in Scottish retail sales.
The package of rates relief for small stores and pubs, whilst welcome, is unlikely to make good on the ‘renaissance’ of high streets pledged by the Prime Minister. Here in Scotland a £22 million hike in retailers’ business rates bills is on the cards unless action is taken in the Scottish Budget.
With domestic consumers still chary of spending the Chancellor missed an opportunity to reinstate tax free shopping for international visitors.
The centrepiece of the Budget was the unveiling of a raft of measures to help some households with rising energy bills. Motorists will welcome the extended fuel duty cut given pump prices. Support for rising electricity costs was extended to businesses but energy-intensive food retailing - with all of its refrigeration and distribution outlays – will miss out.
Attention now turns to December’s Scottish Budget and new Finance Secretary Jenny Gilruth’s chance to shape the economic outlook. This should be an unabashed Scottish Budget for shoppers: ruling out new levies on retail, freezing retailers’ business rates and making them more competitive with England, and boosting funding for the Retail Crime Taskforce. This would help deliver the ambition to make Scotland the best place in the UK to grow a retail business.
David Lonsdale is Director of the Scottish Retail Consortium
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