In the wake of the latest Budget announcement by Chancellor Rachel Reeves, significant changes loom for the grocery industry.
The new economic policies revealed in the Budget include increases in national insurance, modifications to the soft drinks levy, and hikes on tobacco and vape taxes. Businesses are now pondering the implications of these changes, particularly in the realm of business rates. From 2026/27, the government plans to lower business rates for retail, hospitality, and leisure properties permanently, adjusting the rate relief from 75% to 40% and freezing the small business multiplier for 2025/26.
Opinions across the industry are diverse. Co-op’s Chief Executive, Shirine Khoury-Haq, is optimistic about the direction towards business rates reform, expressing hope for a system that benefits high street retailers and communities. Meanwhile, Helen Dickinson from the British Retail Consortium warns of potential punishments for businesses with higher rateable values, which might impact distribution hubs and larger stores essential for drawing footfall to town centres.
In addressing retail crime, the Budget promises to scrap immunity for low-value shoplifting and increase funding to combat organised retail gangs. This action has been met with approval from industry leaders, who have long sought stronger measures against retail theft. Co-op’s Khoury-Haq welcomed a firm commitment to addressing the issue, highlighting the damaging impact of retail crime on sector workers and communities.
Changes to Employers’ National Insurance Contributions (NICs) are also a concern, set to rise from 13.8% to 15% on earnings above £175, with the taxable salary threshold reduced significantly. Helen Dickinson remarks on the added burden this places on retailers, potentially stifling investment in an industry already struggling with high costs.
The Budget further underlines changes in the National Living Wage, increasing to £12.21 an hour for those over 21, prompting businesses like Co-op to call for the abolition of age-differentiated wage rates.
For the farming sector, the proposed end of 100% inheritance tax relief on properties above £1 million threatens family farms, according to NFU President Tom Bradshaw. He argues this move could elevate food production costs and damage farm confidence significantly, complicating the future for generational farming and British food production.
Finally, the wine and spirits industry faces challenges with a planned increase in Alcohol Duty rates aligned to the Retail Price Index. This includes frustrations voiced by leaders from the Wine and Spirit Trade Association and Scotch Whisky Association, who fear that such tax changes will deepen financial strain on businesses already grappling with complex taxation systems. Nicola Bates of Wine GB and John Colley of Majestic Wine foresee negative impacts on both local producers and market competitiveness.
The Budget 2024 introduces substantial changes that pose hurdles for various sectors within the grocery industry. Stakeholders express a mix of optimism and concern over the potential implications, as the government aims to balance economic growth with increased responsibilities for businesses.
