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Independent Retailers: How Will 2026 Budget Affect You · The Resilient Retail Game Plan - retail insights, retail trends and best practices

• 0:00
  What does the latest budget announcement mean for you and your business?
• 0:05
  Welcome to the Resilient Retail Game Plan.
• 0:08
  I'm Catherine Erdly, and this podcast is here to share retail industry
• 0:11
  trends, insights, and best practices for you, the retailer who's serious
• 0:15
  about building something that lasts.
• 0:18
  I wanted to delve into the most recent budget announcement in today's episode.
• 0:24
  So yesterday, on Wednesday the 28th of October, after Prime Minister's Question
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  Time, the Chancellor of the Exchequer, John Healey, delivered his first budget.
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  And it felt like there was a lot riding on this budget, and that was one of the
• 0:37
  reasons that I wanted to do this podcast.
• 0:41
  Over the last couple of years, retailers have faced substantial increases
• 0:45
  in the cost of employing people.
• 0:47
  Helen Dickinson, the head of the British Retail Consortium, estimated that changes
• 0:53
  to employer national insurance and two annual increases in the National Living
• 0:57
  Wage have added 6.5 billion pounds to retail employment costs over that period.
• 1:04
  So this is basically saying that over the last couple of budgets, they felt like
• 1:08
  there'd been increasing pressure on the entire retail industry across the board.
• 1:14
  So for individual business owners, it shows up as payroll leaving
• 1:17
  your bank account or hours that you can't afford to offer and whether
• 1:21
  you can take somebody else on.
• 1:23
  And these costs have arrived for not just independent retailers,
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  but for big retailers too, at a time while customers are also
• 1:31
  watching their spending carefully.
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  So businesses were really looking for a change of direction, and there's
• 1:39
  been a lot of anticipation about this budget, maybe more so than previous
• 1:43
  budgets, hoping to see that there would be some shift and some change.
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  And I think the other thing that was really interesting about this budget
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  and the reason I wanted to cover it on the podcast was because since
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  becoming Prime Minister, or as part of his campaign actually to become Prime
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  Minister, Andy Burnham has made the High Street a prominent part of his agenda.
• 2:03
  So, for example, in July, the government announced an additional 20% business
• 2:08
  rates cuts for pubs, social clubs, and eligible live music venues in
• 2:12
  England, which starts next April.
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  And there've also been proposals to give councils more control over new
• 2:19
  vape shops and gambling premises.
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  But a lot of people wanted to see actual fundamental changes to the cost
• 2:26
  base that is currently being faced by retailers, both small and big.
• 2:32
  You may have seen an open letter on Instagram shared by Frankie Dyer, who owns
• 2:37
  Barbakan Deli in Chorlton in Manchester.
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  She describes investing in the business, creating jobs, and growing sales,
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  but still struggling with bills.
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  And it illustrates something that I talk about regularly, which is
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  turnover alone cannot tell you whether a business is financially healthy.
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  you can be busy, have loyal customers, and work incredibly hard, but
• 2:56
  still struggle to have enough cash.
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  And I think that that's why feelings have been running so high in the run-up
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  into this budget is because a lot of business owners have felt that they
• 3:06
  are struggling with lots of different rising costs in different places.
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  Business owners really wanted to know whether the government understood
• 3:14
  the pressure that they were under and what they would actually do about it.
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  This is all against the backdrop of a budget which is very constrained
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  financially in terms of this is not exactly a time when the government has
• 3:26
  got a lot of money, to put it mildly.
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  And so when I was talking to people, for example, industry associations or
• 3:35
  other retail experts in the run-up to the budget and asking them what they
• 3:39
  thought we were going to see, the answer was most people had high hopes but
• 3:43
  fairly low expectations in terms of what can the government actually deliver?
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  So I think it's worth remembering in that context that this was a budget that
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  was always going to be about trying to make changes or take action that looked
• 3:57
  like they were making a difference, even though it's not like, again,
• 4:00
  the government has got a lot of money that they were able to move around.
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  So one improvement in my view of this budget compared to last year
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  in particular, was the timing.
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  So last year's budget was on the 26th of November, which was just
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  two days before Black Friday,
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  There was evidence that customers were holding off.
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  It was widely touted as being a difficult budget.
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  They were quite upfront about how it was gonna be hard for consumers, so
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  people were nervous, and that combined with the anticipation of potential
• 4:31
  discounts on Black Friday meant that there was definitely evidence
• 4:34
  that consumers were holding back.
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  So at least this time, having it in October, it's better timing,
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  and it should have less of an impact on the November sales.
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  It gives businesses and customers more time to digest it before the crucial
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  trading period really commences.
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  It doesn't remove uncertainty, but I think it is a more helpful point in the
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  retail calendar for the budget to occur.
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  And it does, remove some uncertainty because, of course, when people are
• 5:01
  wondering what this news is going to be, it makes it really difficult.
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  So with all of that in mind, what has actually been announced?
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  So let's start with business rates.
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  For qualifying retail, hospitality, and leisure businesses in England, the small
• 5:16
  business rates relief threshold is rising from £12,000 to £18,000 in rateable value.
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  So that is the property calculation used to calculate rates.
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  It's not the turnover.
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  The government says that this will take around 70,000 additional businesses
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  out of business rates altogether, One number I saw suggested that
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  around 50% of shops on the high streets would actually now be exempt.
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  Now, unfortunately, I've spoken to a few people, a few clients who've got
• 5:46
  rateable values much higher than that, particularly if you're in a higher
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  footfall, high street, or one where there are particularly high property values
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  So unfortunately, it's not gonna be for everybody, and it's also would
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  be wrong to assume that people who are in these higher footfall areas
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  are flush with cash because often it means that they've got higher rents.
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  So I think that that's disappointing that maybe there aren't some more
• 6:13
  businesses that could have been excluded So there will still be
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  around half the businesses that are still being hit with business rates.
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  They also say there's a two-year real terms freeze announced for other retail,
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  hospitality, and leisure properties.
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  So real terms means that your bill can still increase in cash
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  terms if it's adjusted in line with inflation, but it can't be
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  adjusted over and above inflation.
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  And these announcements concern England, so businesses in Scotland,
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  Wales, and Northern Ireland need to check the arrangements in
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  their own particular country.
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  Now, if you run an online-only business, then you may be listening
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  and thinking, "This doesn't help me." So for some of you, it won't provide a
• 6:54
  direct saving, and that's why we also need to look at the whole picture.
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  Next announcement is wages.
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  From the 1st of April, 2027, the National Living Wage for people aged 21 and over
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  increases to thirteen twenty-one an hour.
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  That's an extra 50p an hour.
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  For somebody working 35 hours a week throughout the year, that's a £910
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  increase in additional basic pay before any associated employer costs.
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  So if you employ people, that is something that you do have to take into account and
• 7:23
  put that into your forward forecast and consider what that means for the pay of
• 7:27
  more experienced members of your team.
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  So if you have people who are above minimum wage, what
• 7:30
  do you have to do there?
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  So higher wages help the people receiving them, but obviously for
• 7:35
  small business owners, this is a cost that has to be calculated.
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  So you do have to take that into account for your forecast for the
• 7:42
  following year There is also marketplace VAT, so from October 2027, online
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  marketplaces will be responsible for collecting VAT on qualifying sales by
• 7:54
  UK businesses using their platforms.
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  So the intention here is to tackle non-compliance, which matters for
• 7:59
  businesses competing against sellers who aren't paying the tax that they owe.
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  But if you sell through marketplaces, the practical questions there
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  about which sales qualify, how your payments will arrive, and how
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  refunds and bookkeeping will work.
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  So we don't have all of the detailed rules before drawing conclusions about
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  what this means for individual sellers.
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  And then finally, probably the biggest other announcement was
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  help with household energy costs.
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  The budget includes a £100 energy payment in 2027 for eligible households in
• 8:29
  council tax bands A to D in England, with funding for support elsewhere in the UK.
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  The temporary electricity VAT cut is also being extended until July.
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  There are plans to remove gas standing charges and move these
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  costs into the price per unit.
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  That does not mean that every household will automatically save money.
• 8:47
  The effect will depend on the usage and on the final arrangements.
• 8:50
  But this is relevant to retailers, even when there's
• 8:52
  no direct savings for business.
• 8:55
  If your customers have less pressure on their essential
• 8:57
  bills, then that definitely does help with consumer confidence.
• 9:01
  So consumers really hate food inflation and they really,
• 9:04
  really hate energy inflation.
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  So anything that helps with energy costs is overall good news for consumer
• 9:11
  confidence and hopefully then spending.
• 9:14
  So I would describe it more as a s- possible support for spending rather than
• 9:19
  a reason to expect a sudden jump in sales.
• 9:21
  Some households will use the money to cover other bills, repay debt or
• 9:25
  rebuild savings, and the timing matters.
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  The £100 is coming in 2027, so unfortunately it isn't extra
• 9:32
  money arriving for this Christmas.
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  So what does this leave us with?
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  Well, some shops could see a worthwhile reduction in rates.
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  There will be increases with higher wage costs.
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  If you are an online seller, then you need to understand the
• 9:46
  upcoming VAT arrangements, and household support may help ease
• 9:52
  some of the pressure on consumers.
• 9:54
  Louise Haseman runs 23 Living, a home and lifestyle boutique
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  in Marlow, Buckinghamshire.
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  She had previously posted on Instagram this week asking Andy Burnham to give
• 10:05
  support to small retailers in the budget.
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  This is what she thought about yesterday's announcement
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  I feel really disappointed in what has been announced during the budget today.
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  there's absolutely nothing really being offered for shops like ours.
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  I don't think we're even gonna benefit from the business
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  rates relief that he mentioned.
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  So, he's talking about the living wage, minimum wage potentially
• 10:29
  going up, but we're really not seeing any help with anything else.
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  we've got increased energy costs, increased costs generally
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  with transportation, even packaging costs for our online.
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  so no, very, very disappointed,
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  So what does all of this mean?
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  Well, for some people it's great news.
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  It means less rates.
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  For some people it means no change or potentially increased
• 10:51
  costs in the next year.
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  And hopefully what we're seeing is a little bump of consumer confidence
• 10:56
  with more support for fuels.
• 10:59
  So unfortunately, I think the predictions came true that there were a lot of
• 11:02
  things promised, and the government has done what they can within the limited
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  parameters that they have to work with.
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  So potentially it is less of an increase on minimum wage than expected, so
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  potentially slightly better than expected.
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  But I would say that this is not necessarily going to have a huge
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  positive impact on lots of people.
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  Although, as I said, if you are one of those businesses that has moved from
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  having to pay business rates to no longer having to pay business rates, then that
• 11:32
  is a really good, positive forward step.
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  So what's my advice?
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  Do keep focusing on getting Christmas ready, on pushing that festive season.
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  Hopefully, again, we've got that uncertainty of the budget out of
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  the way so we can push that forward.
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  I do think at a time when costs are continuing to rise and we maybe
• 11:54
  haven't seen the relief that we would have liked to see for everybody,
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  then you do have to be efficient.
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  This is not the time to be carrying more stock than you need.
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  This is not the time for you to be basically running your
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  business in an inefficient way.
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  So I would definitely recommend that you think about what you
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  can control in your business.
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  Is there anything, any improvements that you can make?
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  Anything that you can do to take back control and just keep focusing on the
• 12:20
  fact that we've got the biggest sales months of the year directly ahead of
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  us, and we have to keep surprising and delighting our customers from there.
• 12:29
  See you next week