SRC seek ‘swift action’ in Scottish budget to assist reinvention of retail

Keeping down business taxes, supporting consumers, and aiding retailers’ investment in skills should be at the heart of the Scottish Government’s Budget this autumn, according to the Scottish Retail Consortium (SRC).

In its Budget submission entitled ‘Shaping retail reinvention’ sent last week to Finance Secretary Derek MacKay, the SRC highlights the sheer pace of the profound changes affecting retail and proposes recommendations to Government - and Parliament as a whole - in key areas affecting consumers and retailers such as Scottish income tax, devolved business taxes, and skills funding.

Specifically, the SRC is recommending that Scottish Ministers:

Freeze the headline business rate poundage

Accelerate the timetable for restoring the level playing field on the large firms’ rates supplement

Scrap the proposed new rates levy on out of town and online businesses

Rule out increases in income tax and speed up the introduction of the zero-rate income tax band

Increase the flexible workforce development fund and the amount firms can access

Engage business on the soon to be devolved post-Brexit powers so that they are implemented or flexed in a sensible and cost-effective manner

The submission from the leading sectoral trade association comes ahead of the publication later this year of the devolved administration’s spending and taxation plans for 2019-20.

The retail industry is Scotland’s largest private sector employer, providing almost a quarter of a million jobs, and the SRC’s members include well known high street, out-of-town, online and grocery retailers. However Scottish retail is an industry in transition and official data has shown a drop in the number of shops and retail jobs over recent years.

David Lonsdale, SRC Director, said: “The retail industry is going through an unprecedented period of transition. Technology, changing customer behaviour, constrained household incomes, and significantly rising cost pressures have led to a perfect storm. It’s hard to think of a tougher time to be a retailer, and difficult to be clear about what the future of the industry will be.

“We are looking to the devolved government and MSPs to take swift action to support the industry and protect jobs. Whilst progress is being made in the structural reform of business rates, any increase at all in the poundage will exacerbate a very difficult situation, which is why we are calling for a freeze on rates, and for acceleration of the timetable for parity with the rest of the UK on the large business rates supplement. Similarly, this is not the time to be experimenting with extra taxes on businesses; the government should ditch its proposed out-of-town and online levy.

“Keeping costs down is one part of the equation. Another is growing the economy and encouraging consumer spending. With that in mind, and after significant alteration last year, we believe income tax rates should not increase in the Budget. Furthermore, the Finance Secretary should bring forward his planned zero-rate income tax band which would reduce bills for lower earning workers, those most affected by inflation and rising interest rates.

“Supporting firms who invest in their workers and property is crucial. In particular, with Scottish retailers paying £12 million through the Apprenticeship Levy, we want to see the resulting workforce skills fund increase both its total value, and make more money available for those levy-paying retailers.

“In Scotland a new chapter of devolution will flow from Brexit. We want to see government engage with business on these new powers to develop an approach which supports the economy at this challenging time.

“With retail under enormous pressure, this Budget is an opportunity for Ministers and MSPs to take tangible steps to help retailers as they seek to reinvent themselves for the future. We hope the Finance Secretary will seize the moment.”