With the election manifestos published we can finally see what the parties have for retail.
Unfortunately, there’s precious little in any of them to suggest that the UK’s largest private sector employer has been given much thought at all.
Timeline for Business rates
- June 9, 2017
Income tax looks likely to go up whoever gets into power.
While the Conservatives have not explicitly revealed any income tax or national insurance increases, they have rescinded their previous commitment to freeze personal taxes, leaving the door open to rises.
Labour’s plans are more explicit – no increases for those earning less than £80k, but those earning more will pay an extra 5p for every pound above that threshold, while the Lib Dems say they would increase income tax by 1p in the pound for everyone.
With inflation outstripping income growth, retailers are already having to deal with a more constrained consumer (recent ONS data showing strong retail growth points to unsustainable levels of borrowing), and any increase in personal taxation will hinder spend further.
While the Conservatives have recommitted to reducing corporation tax to 17 percent, both Labour and Lib Dems plan to hike it back up, to 24 percent and 20 percent respectively.
Retailers would be less affected than other sectors by such rises though, given their narrow and ever reducing margins.
Both the Conservatives and Labour say they will not increase VAT.
One of the acutest pain points for retailers over the past two years has been the rise in the minimum wage, due to how dependent retailers are on unskilled employees.
The Conservatives say they will increase the minimum wage for over 25s to 60 percent of median earnings by 2020, Labour plans to ensure all over 18s get £10 an hour by 2020, while the Lib Dems commit to increasing minimum wages without specifying by how much.
Retailers can’t find much solace in any party here, though Labour’s plan to include 18-25 year-olds in the top rate will be especially unwelcome.
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Both the Lib Dems and Labour have vowed to ban zero-hours contracts, which many retailers rely on to keep costs down and match resources to fluctuating demand. The Conservatives have held firm in supporting zero-hours contracts, despite their unpopularity with voters.
Labour’s rather populist policy of adding four more public holidays would increase retailers’ wage bills.
While the public may be persuaded to go shopping on these days, it is likely that such spend would not be incremental.
The Conservatives continue to target a reduction to “the tens of thousands”, and plan to use the status of EU nationals currently residing in the UK as a bargaining chip in Brexit negotiations.
For retailers, this means an uncertain future for many of their staff, some of who may decide to leave before a deal is done.
It could also discourage further immigration in the run up to Brexit, making it more difficult to hire staff.
Labour has guaranteed the right of EU nationals already here to continue living in the UK, but is also committed to ending free movement.
With a constrained supply, hiring of low-cost staff looks likely to get more difficult post Brexit, especially considering the economy’s current low level of unemployment.
Retailers are already investing in supply chain automation and self-service checkouts to improve productivity as staff costs increase, but it appears that the rationale for such investments will increase whatever the outcome on 8 June.
Both Labour and Conservative parties address business rates, a long-standing problem for physical retailers, but neither offers anything substantial.
Labour plans to move from RPI to CPI indexation and ensures a better appeals process, while the Conservatives commit to more frequent valuations to avoid large changes to bills.
Both parties promise a full review of the business rates system but at an unspecified point in the future.
For retailers there is little to cheer in the manifestos being offered, with no commitments that will help with the increased cost burdens they have incurred over the past few years.
For retail, it’s all about which party will cause them the least additional pain.