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Disappointment at no direct government help for retail in mini-budget

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Chancellor Rishi Sunak’s mini-budget has failed to give any direct help to the struggling retail sector, with VAT cuts only for hospitality and tourism, rather than any hoped for relief for face-to-face retailers.

The economic statement delivered today – billed as the second phase of the government’s COVID recovery plan – was expected to offer a VAT cut for physical retailers. Instead, Sunak only handed it over to the ailing tourism and hospitality sector, cutting VAT there from 20 down to 5%.

However, within the other measures posited by the Chancellor, there was some potentially good news for smaller businesses, suppliers and couriers, as well as the High Street.

A £1000 back-to-work pay-out to all un-furloughed staff, along with a range of measures to drive up apprenticeships and training could help bring people back to work, as well as promoting the recruitment in growth areas such as ecommerce delivery.

The scheme to give anyone £10 off a meal out will also do much to get people back into the High Street.

Helen Dickinson chief executive of the British Retail Consortium, cautiously welcomed the plans: “We welcome the Chancellor’s huge support for employment and training in the UK as the economy emerges from the coronavirus pandemic. Any interventions that aim to protect jobs and incomes are vital to households around the country.”

But she added: “Time will tell if such measures can also bolster consumer demand, which remains well below pre-crisis levels, and the Chancellor must be ready to take further actions if necessary.”

Dickinson was particularly disappointed with the lack of a VAT break for retailers. She said: “The chancellor’s proposals of a VAT cut will be important in reviving these sectors, and the 1.8 million people who work there. However, it was disappointing that the Chancellor did not extend this measure to the retail industry and the three million people it employs. It was a missed opportunity and we hope that the Government will reconsider this ahead of the Autumn Budget.”

Boost for training and logistics

The mini-budget may also bring some relief to smaller manufacturers and logistics companies, as well as those that deliver the growing amount of ecommerce goods, says ParcelHero’s Head of Consumer Research, David Jinks.

“Britain’s retailers and the logistics companies they rely on will find plenty to welcome in today’s financial statement,” says Jinks. “A new jobs retention bonus of £1,000 for businesses who bring staff out of furlough and retain them through to January will give companies the funding to retain valuable – currently furloughed – employees, such as warehouse and back office staff preparing orders for delivery.”

According to Jinks, many couriers and retailers are looking to take on new staff to cope with unprecedented levels of home deliveries and ecommerce. The Chancellor’s £2 billion kickstart scheme for 16-24 year olds, with businesses being paid directly for new starters, will be a boon for many firms.

“New funding measures such as £1,000 per new trainee, £2,000 for new apprentices and a further £1,500 for apprentices over-25 will also boost logistics companies who make considerable use of trainees and apprentices in distribution centres and vehicle maintenance roles,” he says.

BRC’s Dickinson agrees. “The Chancellor’s announcement to incentivise apprenticeships will be welcome news for millions of people of all ages. The next steps must be to carry out a wholesale review of the apprenticeship system with the aim of creating more flexibility to enable the Apprenticeship Levy to meet the skills needs of retailers. Retail is evolving; it is essential that those working in the industry, now and in the future, have the digital and technological skills to capitalise.”

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