Living wage, rates, and apprenticeships to cost retail £14bn
A report on retail’s prospects for 2016 has found UK retailers are facing additional costs of £14 billion over the next four years.
The introduction of the National Living Wage, projected increases in non-domestic rates, plus a levy on apprenticeships will eat into 20 per cent of industry profitability, according to the British Retail Consortium (BRC).
Their Retail 2020 report said the additional burden would mean some 900,000 jobs could be lost in retail by 2025.
Increased automation and more online shopping is also expected to prompt an increase in store closures. Currently, two per cent of stores are closing each year, but that is expected to rise to three per cent, resulting in 74,000 shops shutting over the next ten years from today’s total of 270,000 stores.
The BRC also said it believed smaller businesses would be more affected by issues such as the so called National Living Wage, as they have fewer ways to absorb the costs compared to large supermarkets.
“Smaller retailers are more restricted to cutting posts or reducing differential rates between junior and more senior roles and have less scope for step change investment in areas such as logistics, technology or training,” the report said.
Responding to the study, chief executive of the Northern Ireland Independent Retailers Association, Glyn Roberts, called on government action to ease the burden on retailers.
He said: “Small traders are facing a perfect storm of business costs with the rates revaluation, the National Living Wage and auto enrolment pensions.
“Our members will be facing a nearly 50 per cent increase in their wages bill as a result of the Living Wage and auto-enrolment, not to mention many of them paying up to 100 per cent extra in their rates bill.
“Given that 99 per cent of all local business is small, the impact of the National Living Wage will have a particular detrimental impact on our indigenous business base.”
Mr Roberts said a number of NIIRTA members had indicated expansion plans for their businesses are on hold as they struggle to afford to pay “crippling” costs.
“Unless the issue of high costs is addressed, the creation of jobs and new investment will be reduced at time when government needs to be doing more to support our private sector,” he said.
“In principle, NIIRTA is not opposed to the National Living Wage, but the Chancellor in his 16th March Budget, needs to give small traders greater tax relief to alleviate the big jump in their wages bill.
“NIIRTA has already outlined radical reform in business rates in our Programme for Government and will continue to engage with local political parties to ensure their Assembly Election manifestos include this policy priority.”
