The UK’s newly appointed chancellor, Rishi Sunak, presented his first budget on Wednesday, attempting to address the demands of the struggling retail sector. However, industry experts believe that his measures fall short in certain areas, despite the Confederation of British Industry (CBI) describing the overall budget as “bold.”

The budget includes various spending commitments to support the economy during the coronavirus outbreak and other initiatives, leading to concerns about the impact on the economy due to increased government borrowing. Nevertheless, there were some positive developments for the retail sector. One notable change is the suspension of business rates for companies with a property value of less than £51,000 for this year.

While this may appear to be favorable for the retail industry initially, it is important to note that larger businesses are responsible for a significant portion of the total business rates paid. The £51,000 threshold could pose challenges for department stores that are already under pressure. The recent closure of Beales, for example, was partly due to a substantial business rates bill. Similarly, prominent department store chains such as John Lewis, Debenhams, and House of Fraser are currently facing financial difficulties with significant rates bills for their properties.

Unfortunately, the budget did not include any other concessions for business rates specifically aimed at these companies, nor a clear commitment to long-term changes in the business rates structure. However, the chancellor did announce a future “review” of the system, which could potentially offer relief in the coming years.

Addressing concerns surrounding plastic pollution, the budget also introduced a tax on plastic packaging starting from April 2022. Makers and importers of plastic packaging containing less than 30% recyclable material will be required to pay a £200 per tonne tax. While this is a step in the right direction, environmental activists argue that these measures do not go far enough, with Greenpeace calling it a missed opportunity.

On a positive note for retail workers, Sunak assured that those who need to self-isolate will receive statutory sick pay. Additionally, the budget includes an increase in the national insurance threshold from £8,632 to £9,500 and a commitment to raise the National Living Wage to £10.50 per hour by 2024. However, employers may not view the latter move favorably.

While the UK’s ‘coronavirus budget’ provides some relief to the struggling retail sector, it is evident that more comprehensive measures may be required to address the challenges faced by businesses and promote long-term sustainability. The industry eagerly anticipates the promised review of the business rates system later this year, hoping for substantial changes that will better support retailers in the future.

Useful links:
BBC: Chancellor Rishi Sunak ‘risks next generation’ with borrowing
Retail Gazette: Chancellor fails to address business rates concerns of big retail