More than 40,000 north-east retail and wholesale jobs are vulnerable as a “looming” rise in business rates threatens to “push many firms to the brink”, a new report has warned.
The expected increase to business rates in the spring may plunge much of the sector into a fight for survival, it said.
A slow revaluations system means retailers and wholesalers are already overpaying, with many facing liabilities as high as rents, the report added.
It’s crucial we see a more strategic and collaborative approach from government towards nurturing the growth of the industry, coupled with concerted action to reduce the burgeoning cost of doing business.”
David Lonsdale, director, Scottish Retail Consortium.
The report – published today – has been produced jointly by the Confederation of British Industry (CBI) and Scottish Retail Consortium (SRC).
The two business groups have teamed up to urge the Scottish Government to rethink any rise in rates and implement longer-term reforms which would reward investment.
New CBI research suggests the UK retail & wholesale sector is worth £352 billion a year to the economy and supports 5.7 million jobs, about one-fifth of Britain’s workforce.
In Scotland, the sector is said to contribute £24.7 billion and support 417,993 jobs.
Aberdeen city and shire are estimated to account for £2.963 billion and 44,818 jobs, nearly one-fifth of area’s total workforce.
‘Critical’ steps now required
According to the new report, reforms to an “outdated” system of business rates and an “inflexible” apprenticeship levy are “critical” steps to protecting a “lynchpin” industry.
SRC director David Lonsdale said: “Retailers have shown tremendous fortitude and resilience to come through the tribulations of the past few years, continually adapting their business models at pace to meet evolving customer expectations.
👣📈The latest BRC-@Sensormatic #footfall monitor is out today, showing footfall stumbled in October.
Retail footfall remains almost 12% down on pre-pandemic levels after slipping back further on September, amid rising inflation and energy bills.👇https://t.co/20ZN9TfyZm
— The British Retail Consortium (@the_brc) November 4, 2022
“If the industry and the broader ecosystem it supports is to flourish and fulfil its potential over the decade ahead, then change is required from policymakers.
“It’s crucial we see a more strategic and collaborative approach from government towards nurturing the growth of the industry, coupled with concerted action to reduce the burgeoning cost of doing business.
“This will help retailers keep down prices for customers, rejuvenate our high streets and city centres, and sustain tax revenues for government.”
CBI’s research suggests UK retailers and wholesalers contribute £50 billion in taxes to the Treasury, enough to fund 110 new hospitals a year.
But the fallout from Covid-19 and war in Ukraine continues to weigh heavily on the sector, according to the new report.
SRC said Holyrood could take mitigating steps by bringing forward its commitment to ensure the large business supplement is brought into line with rates in England, removing a long-term competitive disadvantage amid the cost-of-doing business crisis.
Retailers and wholesalers at ‘epicentre’ of Scottish economy woes
CBI Scotland Director Tracy Black said: “Retail and wholesale businesses have remained at the epicentre of every economic ecosystem in Scotland throughout the crises of the pandemic, war in Ukraine, supply chain disruption and surging costs.
“The sector has often been the first line of defence during these economic headwinds, and continues to prioritise supporting households, as well as their employees, through these challenges.
Economic growth a ‘national imperative’
“With economic growth now a national imperative, the industry is once again leading the charge.
“Retailers and wholesalers continue to invest heavily in training their employees; they not only decarbonise their own operations but help their customers reduce their carbon footprint too; and they’re levelling up in action, as anchor points on Scottish high streets.”
Ms Black added: “Amid unprecedented levels of inflation and a cost-of-living crisis, it has never been more important to have retail and wholesale firing on all cylinders.
“That is why we are asking the Scottish Government to smooth the looming business rates cliff edge; without intervention to freeze business rates in 2023, firms face the possibility of eye-watering rises which present an existential threat for many businesses.
“Longer-term reforms which encourage investment and fresh thinking on the apprenticeship levy can help future-proof the sector and spur further growth.”
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