Urgent reforms of the UK’s outdated trading fee system and inflexible apprenticeship levy are essential to support a retail and wholesale industry that underpins economic activity in every town and city across the country.
new research by CBI Economics, conducted on behalf of the CBI and its retail members, reveals that retail and wholesale activity is now worth £352 billion a year to the UK economy. It supports one in five jobs in the country, with 5.7 million people employed in the sector or its suppliers.
The data shows that 20% of UK constituencies rely heavily on the economic contribution of the sector for more than a fifth of their GVA and employment. This also adds substantial benefits to the public purse, with retailers and wholesalers paying £50bn in tax, enough to fund 110 new hospitals a year.
However, the fallout from Covid and the war in Ukraine continue to weigh heavily on the sector, and a 10% inflation-linked trade rate hike due in the spring risks plunging many businesses into a scramble. for survival. A slow repricing system also means retailers and wholesalers are already overpaying, with many facing liabilities as high as rents.
That is why the CBI, with the support of the British Retail Consortium (BRC), is urging the government to rethink the planned increase and implement longer-term reforms that reward investment.
The CBI also wants to see more flexibility in the apprenticeship levy, a move that could have a huge impact on a sector that already spends £4bn a year on training. This equates to a tenth of all spending on training in the UK.
Together, these measures could spark renewed optimism and investment in a sector that plays a vital role in communities, the broader economy and UK plc’s growth prospects.
Matthew Fell, CBI chief policy director, said:
“Retail and wholesale businesses have remained at the epicenter of all UK economic ecosystems through the crises of the pandemic, the war in Ukraine, supply chain disruption and rising costs. The sector has often been the first line of defense during these economic headwinds, and continues to prioritize supporting households, as well as their employees, through these challenges.
“With economic growth now a national imperative, the industry is once again leading the charge. Retailers and wholesalers continue to invest heavily in training their employees; they not only decarbonize their own operations, but also help their clients reduce their carbon footprint; and they’re leveling up in action, as anchor points on Britain’s high streets.
“Amid unprecedented levels of inflation and a cost of living crisis, it has never been more important for retail and wholesale to run flat out.
“That is why we are asking the government to soften the edge of the looming commercial rate cliff; Without intervention, the dazzling increases scheduled for April will present an existential threat to many businesses that communities depend on. Longer-term reforms that encourage investment and new ideas about the apprenticeship tax can help future-proof the sector and spur further growth.
“While this is a fragile time for the economy, and the immediate focus is on restoring macroeconomic stability, there is real ambition within retail and wholesale to help unlock the huge growth opportunities for UK businesses. They know that the right actions now mean we can look forward to a 2023 full of promise, potential and prosperity.”
Mohammad Jamei, Director of Economics at CBI, said:
“The retail and wholesale sector has undergone significant change in the last decade and is on the cusp of digital transformation. It has also been a key industry in delivering for its customers and its employees throughout the tough times of recent years.
“Therefore, the sector has a lot to contribute both to overcome short-term challenges and to create future economic opportunities; drive technological advances to stay ahead of consumer needs and create transferable digital skills to safeguard employees’ futures and enable their advancement.
“As such, we were pleased to work with companies in the sector to build evidence around the myriad ways they contribute to the economy, society and local communities. We are excited to share our findings today and hope it will start open and constructive conversations between business and government on how to work together to get through the tough times ahead and create long-term prosperity.”
Helen Dickinson, Chief Executive of the British Retail Consortium, said:
“Retail touches every community every day, providing us with all the goods we want and need. As the largest private sector employer in the UK, supporting jobs in every corner of the country, the success of the industry matters. We have a world-leading, innovative and resilient retail industry that we can all be proud of, and it needs the right environment to thrive.
“High global commodity costs, a weak pound and a tight labor market are driving up prices for consumers at a time when they already face higher bills and mortgage payments. Unless action is taken, retailers will face an extra £800m in merchant fees every year from 2023. This is money that would be better spent keeping prices low and supporting local communities. The government must boost investment and protect customers by freezing or limiting this rate increase, and ensure retailers do not pay more than they owe in fees by reforming the broken transitional relief system.
“The government should also reform the learning rate. Hundreds of thousands of pounds are currently wasted every month, which means lost job opportunities, lost training and lost career progression. The industry needs a better skilled, more productive and better paid workforce, but this broken system is holding it back. The government should make the tax more flexible so that retailers can use the funds for high-quality pre-employment courses, short on-the-job development courses, and to cover other costs related to training their people.”
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