Dear Finance Secretary,

Scottish Budget

The decisions taken in the UK Government’s Budget on employer’s national insurance contributions (NICs) have fundamentally altered the outlook. This was reinforced in a letter yesterday to the Chancellor of the Exchequer initiated by our colleagues in the BRC and signed by 79 retailers (attached).

The colossal cost of what has been announced in terms of employers NICs will have a significant and disproportionate impact on the retail industry, which is Scotland’s largest private sector employer. We estimate this will add £190 million annually to retailers’ employment costs, starting from April. It will come on top of other UK Government measures which will also require further significant outlays, including the above-expectations uplift in the statutory living wage and the soon to be introduced extended producer responsibility levy for packaging.

The sheer scale of the cost increase announced by UK Ministers is alarming, more so given Scottish retail sales have been flatlining for the past five months. This will be incredibly difficult to absorb and will have consequences for retailers’ investment plans, staffing and employment, and potentially shop prices. It will also affect suppliers.

Against this backdrop, it is unconscionable that Scottish Ministers could compound the costs crisis facing the retail industry by introducing a business rate surtax on grocery stores. To this end, we implore you to ditch the mooted business rate surtax. Furthermore, as set out in our Scottish Budget recommendations paper and Tax Strategy submission, we ask for a focus on competitiveness: restoration of the level playing field with England for firms paying the Higher Property Rate; a blunting of any inflationary uplift on Scotland’s three business rates; and use of Barnett Consequentials from reductions in English rates to reduce rates here.

Yours sincerely,

David Lonsdale

Director

Scottish Retail Consortium