Retail has never been an easy business. Margins are slim, competition is relentless, and consumer tastes change quickly.
No one expects the government to make life easy, nor can ministers be blamed for global crises.
But what makes the present moment so perilous is that, just as the industry is finding its footing after the pandemic, an energy shock and the highest inflation in decades, the Treasury might add yet more fixed costs – taxes – to businesses already stretched to breaking point.
The danger is not some distant threat: it is here and now, in the steady erosion of jobs, investment and consumer confidence.
Shoppers can see the damage in their own towns. In the last year alone, 100,000 retail jobs have vanished. Since 2015, close to 350,000 roles have gone – the size of entire industries wiped from the map.
Each number is a shuttered shop, a career cut short, or a community diminished. Retail still employs around three million people, making it the country’s largest private-sector employer, yet too many high streets are losing their heartbeat.
Andrew Higginson is chairman JD Sports & British Retail Consortium
Inflation, after months of relief, is creeping upwards again, and even the Bank of England concedes that government policy is part of the reason as retailers struggle to absorb the higher taxes and costs imposed in April.
If costs are forced onto shops, the inevitable outcome is that customers pick up the bill.
JD Sports, which employs 25,000 people in the UK and has nearly 450 UK stores, has proved resilient in tough years.
However, if the government continues down this path the results across the retail industry will be unavoidable. More shop closures, weaker high streets, and less investment in the future.
What is too often forgotten is that this is not just bad for business owners, it is bad for the Exchequer too.
Every time a store closes the Treasury’s tax take shrinks, supply chains fracture, and town centres become emptier and more run-down. Piling costs on shops costs us all, including the Treasury itself.
The current business rates system is the clearest example of a tax that looks simple on paper, but creates havoc in practice. Ministers are right to want reliable revenue to fund schools, hospitals and policing.
Few in business would quarrel with the need for balance sheets that add up, and the retail industry has long contributed a far greater proportion of UK taxes than its share of the economy. But the way the system operates today is perverse. It penalises precisely the businesses that keep high streets alive.
The Government agrees that the current rates system is broken. But it won’t be fixed by shuffling costs between different-sized retailers. Anchor stores and the roughly 4,000 larger shops that act as magnets for town centres – employ a third of the retail workforce and drive five times the footfall of the average shop.
JD Sports is one of those anchors: the kind of destination that pulls young people and families into town centres, sustaining the cafés, newsagents and independents around it.
Every time a store closes the Treasury’s tax take shrinks, supply chains fracture, and town centres become emptier and more run-down, says Andrew Higginson
Yet the Government could soon tax these anchors even more, as if they were expendable cash machines.
When an anchor shuts its doors the damage ripples outwards. The independent café loses its customers. The bus service is cut back. The street grows darker and less safe.
To treat these stores as little more than a convenient revenue stream to dip into, would be to misunderstand the ecosystem of local economies.
The government may argue that larger retailers look more robust, with deeper pockets and stronger balance sheets.
We have heard from some the ignorant rhetoric that they should ‘suck it up’.
However, can anyone seriously claim shops can absorb indefinitely rising costs when so many household names – once thought unassailable – have already vanished from the high street?
At a time when ministers want growth, jobs and stronger communities, it makes no sense to press hardest on the very employers who provide them.
There is an alternative that does not demand extra spending and need not cost the Treasury more. Ministers can exclude shops from their new higher tax band and shift more of the burden onto sectors where business rates are a smaller share of overall costs – large office towers, for example.
Businesses outside retail are less labour-intensive, less tied into local communities, and less vulnerable to a tax that can push a shop from survival into closure. The Exchequer would still receive the same revenue, but with far less collateral damage to families, jobs and town centres.
This is not a plea for special treatment, but a call for common sense. In principle, tax should fall where it does the least harm.
However, ministers cannot claim to support growth while imposing disproportionate costs on the country’s biggest private employers. You cannot say you care about towns and cities while hammering the very businesses that knit them together.
Labour came into office promising to back long-term investment and stronger growth.
Those are the right goals, but the risk is that the Treasury falls into short-termism, chasing numbers that look appealing on an OBR forecast in five years’ time, but wreak havoc in the real world.
Ministers must resist the temptation to sleepwalk into this glaring trap. Clever arithmetic means nothing if it destroys the businesses that generate tax revenue in the first place.
The test for the Chancellor in her upcoming Autumn Budget is clear. Do the coming reforms ease the pressure on the stores that hold high streets together? Do they allow retailers to keep investing, hiring and training? Do they protect families from higher prices by cutting the fixed-cost burden rather than raising it? If not, the policy – I’m afraid – will have failed.
Retail is not asking for subsidy, protection or indulgence. It is asking for stability, predictability and a system grounded in economic reality.
That would mean ability to plan, invest and keep doors open, high streets that are vibrant rather than boarded up, and a Treasury that gains revenue from growth rather than from decline.
The choice, in my view, is simple.
Increasing the tax on the anchors that sustain our high streets and watch more jobs and communities wither.
Or rebalance now, protect livelihoods, and secure the growth that Britain so desperately needs. The country is waiting to see which way Labour will turn.
Andrew Higginson is Chairman at JD Sports and British Retail Consortium
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