Spring Budget: “Government has had five years to fix business rates, as promised in their election manifesto”

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The government is facing criticism over its latest Spring Budget, delivered yesterday by chancellor Jeremy Hunt before a rambunctious parliament. The announcement was notably absent of a number of key issues raised by industry insiders, including reforming business rates, reinstating VAT-free shopping for tourists and tackling retail crime.

But there were some slithers of good news for small business owners. The threshold for VAT registration will go up from £85,000 to £90,000 while the chancellor is also cutting the main rate of national insurance contributions by 2 per cent. He also announced the upper salary limit for parents receiving child benefit would be increased from £50,000 to £60,000.

However, experts say the measures will do little to help retailers who are struggling with rising costs, low consumer confidence and trading in a weak economy. “This was the budget of what was not announced, rather than what was,” says ParcelHero’s David Jinks. “As such, it will do little to increase the confidence of SME retailers, manufacturers and other businesses, as customers continue to struggle with the cost of living. The government has again failed to tackle business rates reform, leaving many retailers and businesses in a state of limbo. Businesses will find it hard to plan for the future until there is a proper solution to the vexed issue of rates.”

He adds: “The chancellor also pointedly ignored calls from retailers and business leaders to reinstate VAT-free shopping for overseas tourists. Tourists from overseas were allowed to reclaim the 20 per cent VAT on their purchases in the UK until January 2021, when the tax break was scrapped by then-chancellor Rishi Sunak. This has resulted in lost income for many stores in tourist areas and has impacted the entire tourism industry.”

Helen Dickinson, chief executive of the British Retail Consortium, says the budget “will do nothing to deliver a better future for retailers and their customers.” She comments: “The cost of living crisis has taken a toll on businesses and households. Consumer confidence remains low and retail sales volumes in 2023 were the lowest in four years. Yet the chancellor has done little to promote growth and investment, instead hindering it with the business rates rise in April. This has consequences for jobs and local communities everywhere – from the smallest villages to the biggest cities.

“Government has had five years to fix the problems with business rates, as they promised in their election manifesto. Retailers pay over £7 billion a year in rates – over 22 per cent of the total raised by the tax. This is disproportionate, destructive, and any government that is serious about growing the economy must address this as a matter of urgency.”