Chancellor John Healey’s inaugural budget offered targeted interventions, including a two-year cap on business rate hikes matched to inflation, rates relief for small enterprises, and tougher enforcement on VAT evasion across online platforms. However, hospitality and retail leaders maintain these adjustments do not offset escalating employment costs driven by higher minimum wages and national insurance contributions. Consequently, operators like Cumbria-based Herdy have been driven to abandon local domestic manufacturers for cheaper overseas alternatives to maintain viability.
Key points
Targeted property rate relief has proved insufficient to counter the broader financial im…: Targeted property rate relief has proved insufficient to counter the broader financial impact of elevated wages and employer national insurance.
Retailers argue that closing tax loopholes for overseas platforms like Shein and Temu is…: Retailers argue that closing tax loopholes for overseas platforms like Shein and Temu is necessary to establish fair competition.
Hospitality venues face persistent staffing pressures without targeted direct tax relief…: Hospitality venues face persistent staffing pressures without targeted direct tax relief such as a reduction in sector-wide VAT.
Sources checked by our analysis pipeline: 1
“It is like letting the tyres down and then handing you a pump,” says James Nye, assessing the relief handed to businesses in John Healey’s first budget as chancellor.
The managing director of Norfolk’s Anglian Country Inns argues that the budget made a “couple of steps towards helping” but added more labour costs for already burdened companies.
Nye, who employs 500 people at the height of the season at its 10 venues across Norfolk and Hertfordshire, was among those business owners watching Healey carefully on Wednesday, after two previous Labour budgets under Rachel Reeves had loaded extra costs on to businesses.
Healey aimed to help high street operators by removing the business rates burden from more small businesses and limiting the rise in the minimum wage for younger workers.
The chancellor put a lid on increases to business rates, so they will only rise in line with inflation for two years, and clamped down on VAT dodging by online sellers, among other measures intended to help high streets. However, some businesses argued Andy Burnham’s chancellor could have gone further.
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