Alan Monahan writes: In my last column I called for fundamental reform of the business rates system. But I wasn’t at all surprised that the Chancellor of the Exchequer didn’t promise a major overhaul in his Budget on Wednesday, March 8th.
Indeed, Philip Hammond fell well short when it came to addressing the concerns of retailers. The “sticking plaster” I mentioned last week was duly applied to what the British Retail Consortium describes as a “chronically ill patient”.
Of course, the £435 million of new money to help those worst hit by the latest revaluation is welcome – and will bring vital relief to retailers needing immediate help. But it is another short-term measure and doesn’t address the fact that the UK’s property tax is higher than anywhere in the developed world.
The Chancellor may talk the talk about needing a business tax system that is fit for purpose in the 21st century, but will he walk the walk? We’ve been here before and little has been done, despite the best efforts of bodies such as the Federation of Small Businesses, which has called for a cross-party Commission to create a simple, fair tax system for a modern economy.
The FSB rightly condemned the proposed National Insurance rise as a £1 billion tax hike on those who set themselves up in business. As it also breaks a key Conservatives’ manifesto promise it’s a good thing the government has done a u-turn following a country-wide outcry.
How long can consumer spending be the GDP’s mainstay?
It was the question posed by Dr Tim Denison, director of retail intelligence at Ipsos Retail Performance, when the company announced that footfall on UK high streets in February saw its biggest month-on-month drop for 13 years.
Footfall declined by 12.5% compared to the previous month, while it was 6.5% lower than the same time last year as the figures revealed poor performance across the land, with a month-on-month and year-on-year decline in every region for the first time since last September.
Denison, I am sure, sums up the feelings of most of you when he says: “For what is often considered the most depressing month of the year, these footfall figures will do very little to raise the spirits of retailers.”
The second piece of disappointing news for our retailers in February was that UK retail sales decreased by 0.4% on a like-for-like basis from the same month last year, driven by a continuation of the slowdown in non-food spending.
There was some negative distortion created by the later timing of Mother’s Day this year, which meant that some categories – notably women’s accessories and health and beauty – didn’t benefit from the build-up of gift purchases as they did last year. However, the persistent weak sales performance of several non-food categories points to what British Retail Consortium chief executive Helen Dickinson describes as “an undeniable trend of cautious spending on non-essential items.
The BRC-KPMG sales monitor points to tougher times ahead, with the impact of inflation on consumer spending adding to “an already fiercely competitive environment in which the ability to adapt and innovate will be key to survival”.
As far as February was concerned, school half-term holidays are likely to have contributed to the stronger performance in children’s toy sales. And Paul Martin, KPMG’s head of retail, believes that furniture and home textile sales will have benefited from parents using the holiday as an opportunity to spruce up the home.