bonus
Leaked Budgets, Wage Hikes and a Milkshake-y Sugar Tax: Retail’s Autumn Statement Wake-Up Call
This fiery bonus episode pulls no punches, cutting through the Autumn Statement spin with outrage and insight.
Hi, I'm Clare Bailey, founder of Retail Champion.
In this one, we head from the unprecedented OBR leak and Kemi Badenoch’s scathing budget roast to a “minimum wage” hike that isn’t what it seems and a bizarre new “milkshake tax” – we’re calling out the nonsense head-on.
We expose how rising business costs are gutting our high streets and question if energy “support” comes with rationing vibes. We even flag the safety risks of the new self-check-in era, and ask who really wins when small shops get a boost at big retailers’ expense.
Transcript
A budget published 35 minutes before it was presented, an opposition
Speaker:leader ripping strips off the PM and the BBC analysis of Key points
Speaker:before the chancellor even presents.
Speaker:This is probably the most dramatic budget day I've ever
Speaker:I'm Claire Bailey and this is Retail Reckoning.
Speaker:And it had been my plan to assess the budget from a consumer facing
Speaker:and consumer point of view.
Speaker:But let me explain first what's just happened.
Speaker:'cause quite honestly, it was like watching a real life Netflix drama unfold.
Speaker:And then I'll dive into the detail itself.
Speaker:So the OBR Office of Budgetary Responsibility.
Speaker:Report was published around 1155 and I'd got the panel on BBC two
Speaker:politics just in the background on mute while I was doing some work.
Speaker:But then I saw what was cracking up and I was like, oh my goodness me,
Speaker:they were able to grab and download the report, which is now in full
Speaker:view on the Telegraphs website, and start reading out passages live.
Speaker:And then it turned out that Kemi, the opposition leader, she had it as well.
Speaker:She totally took the P out of the government for the
Speaker:chaos around all of this.
Speaker:Of course, she's aware of the documents early publishing, and as I was
Speaker:watching it, I was just astonished that it had been allowed to happen.
Speaker:the BBC cut away from pqs where obviously Kemi was ripping a strip
Speaker:of Stormer and they went back to the panel on BBC politics who'd had about
Speaker:20 minutes to skim read the 203 pages that were in the budget analysis.
Speaker:And they were in analysis mode before it was even presented.
Speaker:I mean, quite frankly, I think Kem Chemi could have been a lot more
Speaker:full on with Starmer over this.
Speaker:, the panel on BBC two were using words like unprecedented and extraordinary.
Speaker:And it is, it was drama in real life.
Speaker:I mean, they were disclosing things like the cap on child maintenance
Speaker:being lifted, that mansion tax.
Speaker:The NI on salary sacrifice, pension contributions, all before
Speaker:it was ever officially presented.
Speaker:Anyway, setting aside the relative madness of today, I've actually planned
Speaker:to look at this in a more moderate, way and consider the core parts that affect
Speaker:consumer facing businesses, so retail, hospitality, leisure, personal care,
Speaker:visitor economy, and large and small, and also those who spend with them.
Speaker:So the consumer themselves.
Speaker:So I'll probably need to draw a breath, recover from this remarkable
Speaker:episode and crack on with what I'd planned to chat about today.
Speaker:So the first thing disclosed this morning ahead of the actual budget
Speaker:presentation with the minimum wage rises.
Speaker:Yet again, it's an impact on the cost of employment, and quite
Speaker:frankly, it already happened when it came out of last year's budget.
Speaker:Impact of cost of employment simply leads to things like
Speaker:reduced hours being offered.
Speaker:Or prices having to rise to swallow the cost of serving staff or
Speaker:staff on the tills and whatnot.
Speaker:That kind of negates the value of minimum wage.
Speaker:'cause people working on minimum wage often work in retail,
Speaker:hospitality, leisure type jobs anyway.
Speaker:So if they get less hours, they've got less spending power.
Speaker:Alternatively, their wages may have gone up, but if prices go up to absorb the
Speaker:cost of the wages going up, then their spending power is actually not changed.
Speaker:sort of seems like all it's doing is driving inflation or putting
Speaker:people under greater pressure.
Speaker:It's also seems to be pushing some businesses to consider actually
Speaker:closing either completely due to the cost of overheads, overall
Speaker:making trade non-viable, and also the ongoing low confidence in the
Speaker:consumer economy, or closed partially.
Speaker:If minimum and living wage are going up on top of the 2024 risers
Speaker:in national insurance and so on, that has already really negatively
Speaker:impacted the ability of even small businesses to cover staff costs.
Speaker:Even those who aren't impacted by the ni, the bigger companies were
Speaker:definitely impacted by both, despite the fact they believe people spend
Speaker:surplus income in the local economy.
Speaker:I worry that there'll be any surplus if prices go up to absorb the cost
Speaker:of staffing or if hours are cut.
Speaker:Now also this morning we heard about sugar tax, that's price rises on
Speaker:milk products as a result of being classified within the sugar tax.
Speaker:I can imagine this is gonna impact on places like cafes and actually
Speaker:there's been a growing trend to dessert centric shops and milkshake type shops.
Speaker:Who offer tweens and teens a place to go that's quite sociable, quite youth
Speaker:centric, and offers, , that environment that's kid friendly and I kind of imagine
Speaker:it replicates the pub for an underage.
Speaker:So yeah, milk tax.
Speaker:Sugar tax, that just seems a little obscure, but we'll
Speaker:see how that one pans out.
Speaker:Then this morning as well, it was, uh, there was a debate going on
Speaker:in Bradford with BBC breakfast as a bit of an outside broadcast.
Speaker:They were chatting to all sorts of people, but, , in particular, Kate OLS from UK
Speaker:Hospitality was on and talking about the impact on business owners in hospitality.
Speaker:And there was also a venue company there in the past year.
Speaker:They were declaring, you know, they'd had lower footfall, fewer customers,
Speaker:fewer customers spending as much.
Speaker:And their business was live music venues that had helped grassroots
Speaker:music's providers to reach an audience and perhaps become the next big thing.
Speaker:Now that company had had to become a CIC, , a community interest company
Speaker:and they got everybody working as volunteers just to keep going.
Speaker:And the topics that were raised and keep being raised were reduce business rates,
Speaker:reduce that for hospitality and so on.
Speaker:yeah, we've heard about that and business rates come up in a bit.
Speaker:The other thing we've seen is that the mayors are gonna have
Speaker:the option to impose tourist tax.
Speaker:Now, a lot of the hospitality owners, and again there was one speaking on
Speaker:breakfast this morning, think that that's gonna hinder occupancy because
Speaker:it puts up costs for UK families who want to stay in UK-based accommodation.
Speaker:it's already quite expensive to be in the uk.
Speaker:The cost of eating out and everything else compared to going abroad, even
Speaker:factoring in flights and accommodation.
Speaker:will people even want to travel in the uk or are they going to increase their
Speaker:propensity to go overseas at a lower cost and for more reliable weather?
Speaker:Let's face it.
Speaker:The other thing they said was that to manage the necessary reduction
Speaker:in staff, they deployed technology like , self check-ins and so on.
Speaker:, but then you have to admit that does reduce service and you've got a
Speaker:question and there's just literally no one there to ask, what do you do?
Speaker:So again, it's a deterrent to people wanting to go to places where
Speaker:they aren't staff visibly present.
Speaker:And also there's a safety risk there.
Speaker:What if you are a single mom traveling with two young kids, and you go to a
Speaker:place and there's only self-checking and a few security cameras?
Speaker:Would you genuinely feel comfortable there?
Speaker:Versus somewhere which was more vibrant and people around and , you
Speaker:know, you didn't just feel so remote.
Speaker:Hospitality are also calling for, , some kind of rates in terms of VA or
Speaker:VAT relief so that they can pass the reduction in cost onto consumers and
Speaker:that will enable, , pubs to hopefully.
Speaker:Get more people sat at tables having a meal or a drink, and hotels to get
Speaker:sufficient occupancy to remain viable.
Speaker:I mean, some of the businesses this morning were saying they have debts
Speaker:to their energy suppliers and they've got signs up to tell their customers
Speaker:to switch off the lights and so on.
Speaker:I mean, that sounds almost like post-war level.
Speaker:And during times in the seventies when there was the,
Speaker:. Rationing of energy and so on.
Speaker:what we can see is fundamentally the last budget has already hurt, and now with the
Speaker:minimum wage increases that are coming on hard and fast, again, the consumer
Speaker:confidence where particularly those who perhaps had a reasonable disposable
Speaker:income are now worrying about some of the changes to things like savings,
Speaker:pensions, tax on pensions, and so on.
Speaker:Business rates impacting.
Speaker:Employment tax that I think that it's going to create a certain element of
Speaker:nervousness until the dust settles.
Speaker:Obviously, we won't see how this percolates through for a while yet on
Speaker:doing this, literally minutes after Rachel Reeves has finished her presentation.
Speaker:One of the things that UK hospitality did say was that hospitality was
Speaker:disproportionately hit in the last budget, and the impact has been,
Speaker:which is something I predicted, I'm not gonna lie, to lose staff.
Speaker:, prices are only able to go up as far as consumers are willing to pay.
Speaker:And with consumer confidence being low, they can't really put the prices up.
Speaker:So many locations are actually reducing their opening hours, but
Speaker:that's a double-edged sword as well.
Speaker:You're paying rent and rates for every hour 24 7.
Speaker:Of course, just putting the lights on, the heating on, switching on the
Speaker:ventilation or extraction fans and so on means that with low footfall, the cost
Speaker:of just switching on the basic systems to welcome customers might be over
Speaker:and above the profit that they'll make on the minimum sales they'll achieve.
Speaker:So yeah, it's a, a really knife edge situation for certainly pubs,
Speaker:restaurants, cafes, bars, and so on.
Speaker:But that's also seen in retail.
Speaker:in this budget as predicted.
Speaker:, and I think I wrote a blog and did a podcast on this a little while ago.
Speaker:She has announced support for High streets for smaller businesses and
Speaker:pubs, and thanks to the lobbying by the British Retail Consortium and
Speaker:UK Hospitality, but she's whacking up the rates on the bigger units.
Speaker:The the ones with over, I think it was half a million pounds, business
Speaker:rateable value, and that was anticipated.
Speaker:But they're really large units, generally out of town.
Speaker:The average one probably has a payroll of several hundred people.
Speaker:She referred to them as the big sheds.
Speaker:Now I remember the analysis by the British Retail Consortium that said
Speaker:something like 400 of those, and of which there might be 4,000 in the
Speaker:whole of the uk, but 400 of those might become non-viable if the bills go up and
Speaker:might then therefore consider closing.
Speaker:So if if they employ 500 or so people.
Speaker:We're talking about thousands of jobs at risk, and that's where they're
Speaker:putting the business rates up to take from the apparently rich, but
Speaker:are they to give back to the small.
Speaker:Now, obviously, the High Street needs support and rates for the High Street
Speaker:need to be considered, but not at the loss of rates for the bigger companies.
Speaker:And I can certainly see that it's positive for a few, but really worrying
Speaker:for some of the larger employers.
Speaker:There was another comment about half of new jobs being
Speaker:created by scale up businesses.
Speaker:So, , they're going to deploy enterprise incentives to help, , expand growing
Speaker:companies and to help them with growing their brand and their identity.
Speaker:And that might be something that helps the brands that perhaps sell to
Speaker:retail and consumers and high streets.
Speaker:Or even might help new and interesting consumer facing service providers
Speaker:who've come up with a concept and then want to roll it out.
Speaker:But it remains to see how that translates.
Speaker:And there wasn't sufficient detail at this stage to really go into that.
Speaker:Obviously any enterprise initiative to help businesses grow is
Speaker:fantastic, but we need to see how that translates to the high street.
Speaker:Another really interesting area was that they're devolving significant cash
Speaker:funds to the seven mayors to invest in skills and employability and so on,
Speaker:and, and particularly the high streets.
Speaker:Got to mention there.
Speaker:, we hope that this does actually hit the high streets.
Speaker:I'm pretty confident it will in York and North Yorkshire because I met
Speaker:their mayor at the launch of the York Business Festival on Monday evening.
Speaker:Quite interestingly, he has been an independent menswear retailer in the
Speaker:center of York and traded for 10 years.
Speaker:So at least one of the mayors has some of that local, independent, small
Speaker:business, , experience and understands the consumer economy in his heart.
Speaker:But he also made me click all because he told and Burnham that
Speaker:he was a better man than him.
Speaker:There was another comment.
Speaker:There'll be support for cost of training and apprenticeships for
Speaker:SMEs for those , employees under 25.
Speaker:In fact, it'll be completely free.
Speaker:So it's handy potentially to help small businesses bring in new staff on a lower
Speaker:risk basis, but then again, with the recent changes to minimum wage, it's
Speaker:no longer as cost effective as it was.
Speaker:And if a small business has to dedicate time to on-the-job training,
Speaker:it can end up costing them more in their own lost productivity.
Speaker:Then it actually generates in the productivity of the
Speaker:apprentice or the learner.
Speaker:whilst it sounds good, only businesses of a certain size and scale are going to be
Speaker:able to take that opportunity on because you can't have the owner with perhaps the
Speaker:one part-time assistant manager, one of those tied up looking after an apprentice.
Speaker:When the apprenticeship now costs or the apprenticeship salary
Speaker:now costs considerably more than it did a couple of years ago.
Speaker:My other final points from watching this live is you've
Speaker:gotta love that deputy speaker.
Speaker:She actually told off one of the conservative mps, she told him to simmer
Speaker:down and stated she expected more of him and she actually wagged her finger.
Speaker:It was really, really funny.
Speaker:Honestly, it smacked of a school mistress telling off an unruly child.
Speaker:But in Venice, I, I did think that, you know, whether they agree with her
Speaker:or not, they should have allowed her to speak and listen with some respect.
Speaker:I'm not surprised people don't like or trust politicians when they can't behave
Speaker:themselves, even in such a serious and significant parliamentary meeting.
Speaker:So anyway, to wrap up on that note, this has been what we've been presented with.
Speaker:Now, there'll be loads of analysis over the next few days.
Speaker:Gut feel is it's potentially precarious.
Speaker:There's some good stuff in there potentially, but you know, we'll
Speaker:have to see how it washes through.
Speaker:And as business owners, small business owners, whether retail, hospitality,
Speaker:leisure, and, and myself running a small boutique consultancy, we now need to work
Speaker:out how to best navigate what's coming, how to manage things like the balance
Speaker:of staffing costs and all the other overheads and our product costs and so on.
Speaker:good luck for those who've been keeping their, , eye on this budget.
Speaker:And as ever, give me a shout if you want to, , have a rant about it.
Speaker:It's certainly something that's got my heckles up today.
Speaker:This has been Retail Reckoning.
Speaker:I'm Claire Bailey, the Retail Champion.
Speaker:Thank you for listening.
