The UK government’s Autumn Statement, which announced a range of financial changes, has received a lukewarm response from various sectors. With a general election approaching next year, the Chancellor has introduced measures that could affect the retail and business community, as well as consumers.

One significant change is the reduction in National Insurance for both employed and self-employed individuals. While this may provide some relief, the Office for Budget Responsibility (OBR) predicts that taxes will still increase. This is because tax thresholds have remained the same, despite rising salaries. As a result, individuals who have received a wage increase that hasn’t kept up with inflation will have to pay more tax on their higher income.

Additionally, the OBR forecasts that living standards, based on real household disposable income per person, could be 3.5% lower in 2024/25 compared to pre-pandemic levels. This would be the largest drop in living standards since the 1950s. However, there are positive measures that could benefit consumers. The State Pension will increase by 8.5% in April, and Universal Credit and other benefits will see a 6.7% rise. Furthermore, the National living wage is set to rise by almost 10% to £11.44 per hour.

One aspect of the Autumn Statement that has received mixed reviews is the treatment of business rates. Small businesses will benefit from a one-year freeze, and there will be a 75% discount on rates up to £110,000 for the retail sector. While this relief is welcome, there are criticisms regarding its implementation. Many feel that the relief falls short of expectations and is not evenly distributed across the retail industry.

David Parker, Head of Rating at Savills, expressed disappointment over the cap on relief benefits, as it primarily benefits small businesses and neglects medium to large enterprises in the retail sector. Similarly, property services company Colliers referred to the business rates measures as the “final nail in the coffin” for the high street. John Webber, Head of Business Rates at Colliers, criticized the calculation of business rates, stating that it is essentially a 60% tax for some retailers.

Colliers estimates that several major retailers, including Zara, Next, and H&M, will face significant increases in their rates bills. For example, Zara’s rates bill is projected to rise from £15.29 million to £16.3 million, while Next’s bill will increase from £97.3 million to £103.6 million. These figures highlight the financial burden that retailers are now facing, with implications for their expansion and growth plans.

Scottish Retail Consortium director David Lonsdale echoed these concerns, emphasizing that the decision not to freeze business rates will result in a £540 million increase for medium-sized and larger retailers across the UK. Lonsdale believes that this hike will lead to higher shop prices and hinder efforts to revitalize town centers and retail destinations. He also criticized the decision in light of the government’s anti-inflation strategy and long-term plan for towns.

In summary, the UK Autumn Statement has received a tepid reception, with concerns raised about rising taxes and the uneven distribution of business rate relief. As the country approaches a general election, the long-term impact of these financial changes on retailers, businesses, and consumers remains to be seen.

Here are two links that provide additional information on the UK Autumn Statement:

1. Autumn Statement 2019
2. BBC – Autumn Statement 2019: What you need to know