Industry body lays out concerns for convenience
THE Association of Convenience Stores (ACS) has warned of a massive potential cost to the sector of £634million ahead of the UK Budget.
Set to be announced on 30 October, the ACS has raised concerns about how the upcoming Autumn Budget announcement could have a detrimental impact on members in the convenience channel.
The industry body has said that the rise in rates of employer National Insurance Contributions, as well as changes to how pension contributions are taxed, could directly impact many store owners across the UK.
The ACS has modelled the potential impact that some policy changes could have on the sector, based on what has already been openly discussed by media and government MPs. This consists of:
• National Living Wage: The current projection for the rate of the National Living Wage in April 2025 is £12.10 per hour, a 5.8% increase on the current rate. This would take the convenience sector wage bill from £7.2bn to over £7.6bn.
• Employers’ National Insurance Contributions (NICs): The biggest determinant of the cost of Employer NICs to the sector is the rate of the National Living Wage. At a rate of £12.10 per hour and with no other changes, Employer NICs would increase in 2025 from £312m to £364m. If there were to be a one percentage point increase in the rate of Employer NICs (from 13.8% to 14.8%), the cost would increase to over £404m.
• Pension Contributions: In the convenience sector, 74% of colleagues are enrolled into a workplace pension. The total cost of pension contributions for the convenience sector is set to rise from £101m currently to £110m in 2025. If employers were required to pay national insurance contributions on their pension contributions, this would cost an additional £15m.
• Business Rates: In 2024/25, the business rates bill for the convenience sector is set to be around £245m (up from £199m last year), with retailers currently benefitting from 75% retail and hospitality reliefs (up to a maximum of £110,000 for large companies). If this discount were to be removed, the sector’s rates bill would increase to around £300m.
If the changes in policy above were to be introduced in the Budget, the ACS has said retailers could be facing down the barrel of a cost of £634million. It should be noted that Business Rates are a devolved matter in Scotland, so this final figure may not reflect costs for retailers north of the border.
James Lowman, chief executive at the ACS, said: “The Government has spoken of promoting investment and growth. Each of these measures, that have been widely trailed in the run up to the budget, would inhibit this ambition and mitigate against investment and growth in the convenience sector.
“The cumulative impact of more than one of these measures could be extremely serious, threatening the viability of the only businesses that remain to provide a lifeline in countless villages and housing estates across the country.
“Our sector is at the sharp end of the fight against retail crime, faces pressure on operating margins and is set to be impacted by a host of new regulations.
“Local shop owners are facing what could be another half a billion pounds of new costs as a result of the budget, and just as the chancellor has to make tough decisions, so too will these business owners face the choice between some unpalatable options as a result; cutting investment, cutting employment or cutting back on the services they provide.
“The chancellor must share the burden of taxes and new costs fairly, and recognise the vital role that local shops play in more communities than any other physical business, right across the country.”
