Why Chancellor must not forget small shop owners in plans for the Living Wage
The Chancellor's much trumpeted National Living Wage in the July budget is no doubt a popular measure for working families in the UK. However, the Treasury has given little thought as to how small businesses and independent retailers could afford a 40% increase in their wage bills by 2020.
The introduction of a compulsory 'Living Wage' will have a detrimental impact on independent retailers in Northern Ireland. This will lead to retailers having to reduce staff hours, work more hours in their business and ultimately cancel their investment plans. To introduce this measure with no consultation undermines the independent Low Pay Commission and is a reckless way to impose a massive burden on small businesses.
The Northern Ireland Independent Retail Trade Association (NIIRTA) has concerns that the proposed increase in the Employment Allowance to £3,000, which is positive for independent retailers, is unlikely to fully off-set the increase in costs brought by the new over-25s National Living Wage rate.
Our members want to pay their staff a living wage, but what the Chancellor is proposing is unaffordable and given that Northern Ireland has the highest density of small business owners (89% employing less than 15 employees) in the UK, it will be the hardest hit.
Our local retail and service sector as a whole is facing a perfect storm of costs, such as rates, auto enrolment pensions, National Living Wage and energy, as well as the ever growing burden of red tape and regulation.
It is the cumulative impact of all these costs and red tape which narrows margins and restricts their growth potential. A number of our members have indicated that expansion plans for their businesses are being put on hold as they struggle to afford to pay these crippling costs. Unless the issue of high costs is addressed, the creation of jobs and new investment will be reduced at time when Government needs to do more to support our private sector.
In response to these challenges, NIIRTA has published a 15-point plan setting our solutions to these challenges. Our plan outlines the need to extend the Small Business Rate Relief Scheme from £15,000 net annual value (NAV) to £18,000 NAV, reform rates to give greater flexibility with economic cycles, carry out rates revaluations every three years, introduce a rural retail rate relief scheme and provide exemptions for small traders investing in expansion, allowing them to offset capital investment against their rates bills.
If the UK government is serious about implementing a National Living Wage by 2020, it must ensure small employers have appropriate tax relief in place to ensure affordability of a 40% increase in their wage bill.
The Northern Ireland Executive needs to implement a better regulation strategy across every government department with a 'one-in, one-out approach' to any new regulation, with yearly targets and should ensure a "better regulation champion" is appointed, to work across departments to challenge bad practice and ensure better regulation targets are met.
It is vital that governments in Westminster and Stormont wake up to the huge threat posed by escalating business costs. Otherwise, we face the very real danger of slowing Northern Ireland's economic recovery.
NIIRTA's 15-point plan is available at www.niirta.com.
- Glyn Roberts is chief executive of the Northern Ireland Independent Retail Trade Association (NIIRTA)