The UK’s Budget 2024, unveiled by Chancellor Rachel Reeves, has sparked varied reactions across the grocery industry as it introduces significant changes to taxes and business rates.
The new budget proposes a permanent reduction in business rates for retail, hospitality, and leisure properties starting from 2026/27. Shirine Khoury-Haq, Co-op’s chief executive, expressed approval of the new direction towards business rates reform. She anticipates that these reforms will encourage high street retailers to invest in their establishments and local communities. Meanwhile, Helen Dickinson, the British Retail Consortium chief executive, noted the uncertainty surrounding the new charges and how they might negatively affect larger stores and distribution centres.
On the topic of retail crime, the government plans to abolish the effective immunity for low-value shoplifting and increase funding to combat organised retail crime. Khoury-Haq welcomed these measures, highlighting the detrimental impact of theft on retail employees and communities. Both the Co-op and the British Retail Consortium support initiatives to address shoplifting and violence towards retail workers.
The budget also includes an increase in Employers’ National Insurance Contributions from 13.8% to 15%, affecting earnings above £175 starting April 2025. Helen Dickinson criticised this decision, arguing that the rise in contributions would hinder investment in shops and jobs within the retail sector. This sentiment resonates with the broader industry, which employs a substantial number of people across the UK.
In other tax changes, the end of 100% inheritance tax relief on farms valued above £1m is set to take effect by April 2026, reducing the relief to 50% for properties above this threshold. NFU President Tom Bradshaw warned that this move could jeopardise family farms, increase food production costs, and reduce farming confidence, which is already at a record low. He criticised the government for breaking promises that could harm future generations’ ability to continue farming effectively.
The increase in Alcohol Duty rates aligned with the Retail Price Index inflation was another point of contention. Industry representatives, like Miles Beale from the Wine and Spirit Trade Association, voiced disappointment, stating that these tax hikes negatively impact businesses and consumers alike, counteracting efforts to promote industry growth. Nicola Bates from Wine GB echoed these concerns, pointing to missed opportunities for supporting domestic wine producers in England and Wales.
The budget has also proved unfavourable to the Scotch Whisky industry, with Chief Executive Mark Kent of the SWA labelling the duty increase as detrimental to the industry and the Scottish economy. He urged MPs to oppose these measures, which he believes unfairly target Scotch Whisky amidst broader tax discriminations against spirits.
The Budget 2024 has introduced a series of impactful changes which have garnered diverse reactions from the grocery industry. While some measures are welcomed, others face criticism for potentially undermining business stability and growth. The discourse highlights the complexity of balancing fiscal policy with the needs of various sectors.
