Convenience retailers find only "crumbs of comfort" in Budget

Wednesday, 22 April 2009

The Association of Convenience Stores (ACS) has welcomed steps to support trade credit insurance in the Budget, but has warned that the Chancellor's failure to prevent tax rises will hurt local shops.

ACS chief executive James Lowman said: "At a time when retailers need radical action to reduce costs, spur investment and create jobs, this Budget contains only crumbs of comfort.

"The failure to act on the looming threat of next year's tax hikes in business rates and national insurance will do nothing to bolster local retailers who are crucial to economic recovery."

On trade credit insurance, Lowman said: "We are glad that the Chancellor has listened to our call to act to sure up trade credit insurance. The withdrawal or contraction of insurance has put pressure on the cash flow of good retailers who rely on a system of credit to get stock onto their shelves. However we are not convinced that measures go far enough.

"In particular we are concerned that six months is a short window for this to have effect. In light of general forecasts about the recession continuing into next year it would have been sensible to extend this scheme until the end of 2010.

"We are also concerned that the scheme will not be available to those suffering from having had credit insurance withdrawn already during this recession. Finally, it is not clear whether there is sufficient accountability for the insurance companies running the scheme to use it effectively for those businesses that need it most."

On business rates, Lowman said: "The failure to act on business rates is potentially devastating. In 2010 the revaluation of commercial property is likely to bring dramatic increases of on average 20% in business rates for retailers. This massive jump in costs taken straight off the bottom line will threaten the viability of businesses. We will continue our campaign for action in this area."

On alcohol and tobacco duty Lowman said: "The increase in duty on cigarettes and alcohol is depressingly predictable for retailers. Every increase in duty fuels the black market and sustains the criminal gangs that thrive particularly in the most deprived communities. This will mean reduced sales for legitimate retailers and less control over who is buying alcohol and tobacco, especially young people."

On VAT Lowman said: "The Chancellor's failed VAT reduction will continue until the end of 2009. We are concerned that the increase back to 17.5% will harm retail sales, but more importantly will require a massive re-pricing exercise on New Year's Eve in the middle of the busiest trading season of the year. This is impractical and will be costly."

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