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Government puts "two fingers up to high street" with Budget

The government has put “two fingers up to the high street” with today’s Budget announcement, retailers have said.

There were few surprises in chancellor George Osborne’s address this afternoon, although the £2,000 National Insurance allowance for businesses offered an unexpected boost to the coffers, particularly for small companies.

The scrapping of the fuel escalator also presents some lightening of the burden both on businesses that transport a lot of stock and for customers, potentially giving them more disposable income. The increase of the personal tax allowance to £10,000, which has been brought forward to 2014, could also give consumers a cash injection.

The rate of corporation tax was lowered by 1% to 20% overall.

But retailers were largely left out in the cold by today’s series of measures, with any tackling of business rates a notable absence. While other industries such as construction were given specific fillips, the high street was ignored.

Paul Turner Mitchell, owner of Rochdale indie 25Ten Boutique, described it as “a big smack in the face for retail”.

He added: “It shows where the government’s priorities lie with high street and retail. So far they have put around £20m into projects like the Portas Pilot, but in the last two budgets the chancellor has raided the high street for £500m.

“We weren’t expecting much but it’s clear now that the government has no intention of doing anything on business rates until they have met their deficit reduction plan – it’s two fingers up to the high street until then.”

Campaining MP Simon Danczuk agreed.

“Sadly, this is a slap in the face for Mary Portas and it undermines her efforts to revive our high streets,” he said. “No matter how hard she works, unless she’s backed by serious government policy to support retailers then I fear she’ll be fighting a losing battle.”

Mainstream womenswear retailer Hobbs also complained about the government’s failure to address business rates, claiming that the current system of basing it on one month’s retail price index (RPI) figure was “harmful to growth”.

Chairman Iain MacRitchie said: “If the government is seeking to revive British retail and wishes to support successful brands in order to help businesses achieve their full domestic and international potential, they should have seized their opportunity to introduce a system that produces fairer and more affordable rate increases.”

He noted there was “a variety of alternative options”, including consumer price index (CPI) or even switching to a system based on a 12-month average RPI.

“Businesses like Hobbs have adjusted to the new multi-channel, multi-national retail reality,” MacRitchie added. “Retailers have moved with the times and now the government must do the same.”

Indie trade association BIRA welcomed the changes to Corporation Tax and National Insurance, but also raised an alarm over rates.

“The chancellor should think on the fact that every independent that closes shuts the door on ten jobs,” a statement from the association said.

John Webber, head of rating at real estate firm Colliers International, described the failure to address business rates as “a real missed opportunity”.

“Government’s failure to act will mean that weaker businesses will shoulder a much greater burden of business rates for at least two additional years while those stronger businesses will be subsidised. The Mary Portas Towns will be significant losers from the postponement,” he added.

“The aspiration nation does not extend to our blighted town centres – perhaps George Osborne is confused with the aspirations of the shoppers in Bond Street. No doubt they will be raising a glass of beer to him in some of the pubs in the West End but in those pubs that are still trading in regional centres such as Wolverhampton, Stockport and Blackpool they may be drowning their sorrows after this Budget.”

Readers' comments (4)

  • There are parallels with the late 1970's and the dilemma that faced Margaret Thatcher - Do you prop up dying industries? Is it right to throw good money after bad?

    Government of any political persuasion can do little to nothing to change the high street - by and large it is finished in its current form. If people want to the use the high street they will, but the vast majority of people, especially the under 25's do not!

    The internet is has killed the high street and while that is a great shame, you can't stop 'progress'...

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  • The above comparison is spot on, independants and even some multiples behaving like miners. The sense of entitlement is slightly nauseating.

    If you can't flip a healthy profit on a store when businesss rates and all other overheads are taken in to account then you need to either revaluate your situation or close, not moan about how the government is "slapping you in the face" by not purposely losing itself money supporting a dying area of an industry during a period of economic uncertainty.

    The way we shop is changing, adapt or die.

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  • ''Paul Turner Mitchell, owner of Rochdale indie 25Ten Boutique, described it as “a big smack in the face for retail”.''

    No one owes anyone a living and all this particular retailer seems to do us moan about not getting 90 days credit and how the Govt has 'slapped' it in the face? Eh? How? What did he think the Govt was going to do? Insist that every person in an area spends a set amount of their income in a local store?
    If they removed parking restrictions in the town it would just become a gridlock so no shoppers would venture there anyway ....the same ones who complain about parking charges except those parking charges ensure a parking spot some of the time. The whole parking argument is so last decade to be honest and really not part of a modern debate any longer. There are too many cars and not enough stopping spaces in most UK towns (many that were mapped out 50-100 years ago).

    Maybe running an indie boutique in an economically depressesed area isn't the job for him afterall?

    The Maggie dilemma as posted above is spot on. My local High St (suburb SE London) is busy-ish but in a different way to years ago and with more 'service' type businesses (nail bars, salons), good cafes of all sorts + a couple of great DIY/Homewares stores. It's not the High st of my 70's chiildhood (which had a large Caters supermarket, huge Hinds dept store and a large busy independent book shop) but the M+S is still there (the clothing targetted at a 65+ demo so it is always quite busy).
    It has evolved to match local shopping needs.

    As to Business rates..the Govt needs this tax to fund the welfare bill (which is mostly pensions) so they will hold fast and not cut them......ultimately it will push the landlords to take the cut on their rents as the retailer tenant looks at the total overhead of rent + rates and is not really bothered which part goes where.

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  • The miners has nothing to do with retailers wanting to survive, back then it was about unions holding the country to ransom. Do some research first would be my advice.

    To have a rates system based on a market five years ago that was in a boom just doesn't not make sense, all they are asking for is a fighting chance.

    The markets maybe evolving but people will still want variation and the ability to go into town and try things on, if we don't do anything there will be little choice and a domination of large retailers with very ugly towns.

    I can only assume the people with these comments either are not in retail or don't run a business.

    Oh and probably didn't study history at school

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