Warning retail job cuts ‘inevitable’ after NI tax rise in Budget
Some of the UK’s biggest retailers have warned that job losses on the high street are “inevitable”, with prices rising and shops closing due to tax rises and other rising costs in the budget.
Tesco, Amazon, Greggs, Next and dozens of other chains are urging the Treasury to reconsider some of the measures.
In a letter to Chancellor Rachel Reeves, they said the “cumulative burden” of budget changes and other policies already in the pipeline would add £7 billion to costs next year.
A Treasury spokesman said the government had to “make difficult choices to repair the country’s foundations”.
Measures in the budget, notably an increase in payroll taxes that companies pay for their employees, have been strongly criticized by the business community, which believes it will hinder economic growth.
But the biggest concern is Retailer and hospitality Enterprises, where many young people find their first jobs. Businesses in these sectors also face higher costs from a minimum wage increase next year.
The government has argued that tax increases are necessary to avoid cuts to public services, and a rise in the minimum wage has also been welcomed by unions as a bigger boost for younger workers and apprentices.
But the business group of the British Retail Consortium (BRC) said in the letter: “The scale of the new costs and the speed at which they are incurred have created a cumulative burden, making job losses inevitable and price increases inevitable.”
It added that since the industry’s profit margins typically range from 3% to 5%, it would be “impossible to absorb such a significant cost increase in such a short period of time”.
“The impact will be to increase inflation, slow wage growth, lead to shop closures and reduce employment opportunities, particularly at entry level.”
The letter’s 79 signatories include major UK retailers such as Aldi, Asda, Boots, Currys, Lidl, Marks and Spencer, Primark and Sainsbury’s, charity shop group British Heart Foundation and trade group Associated Independent Stores.
From April next year, all large businesses will have to pay higher National Insurance Contributions (NICs) for every employee they employ. The starting threshold for employer NICs will be lower than now – from £9,100 to £5,000. The tax rate will rise from 13.8% to 15%. The BRC calculated that this would cost UK retailers £2.33 billion a year.
this minimum wage increase The BRC letter said the industry would lose a further £2.73bn from April.
In addition, from October 2025, a new packaging tax will come into effect.
The Extended Producer Responsibility (ERC) scheme introduced by the previous government shifted the cost of recycling from local councils to the companies that use the packaging. The BRC estimates that smaller businesses will be exempt, but the new levy will cost the retail industry overall £2 billion.
The letter calls on the government to introduce the NI changes in a phased manner and delay the launch of the ERC.
It also urges the government to reduce business rates, a property-related tax that the BRC says will cost retailers an extra £140m a year after April next year.
A Treasury spokesman told the BBC that “more than half of employers will see a reduction or no change in their national insurance bills (and) NHS bills will rise by £22.6 billion” due to exemptions for small businesses.
Business update from Begbies Traynor on Monday The BRC’s warning is being given some weight as the consultancy predicts “support from our insolvency and business recovery professionals” will increase due to changes in national net margins and rising interest rates.
