While the farmers took to the streets of Westminster, the shopkeepers protested in the old-fashioned way. They wrote a polite letter to the chancellor voicing their “significant concerns” over “the sheer scale” of budget measures that, they say, will push up their industry’s costs by £7bn next year and “make job losses inevitable and higher prices a certainty”. A total of 79 firms signed, including all the FTSE 100 crew – Tesco, Sainsbury’s, Next, Marks & Spencer, B&Q owner Kingfisher, JD Sports and the AB Foods-owned Primark.
This display of unity will irritate the Treasury but, almost certainly, will not cause Rachel Reeves to rethink. The chancellor has already told firms how to deal with the rise in employer national insurance contributions (NICs), the most contentious measure and one that comprises £2.33bn of the £7bn. They should absorb it through “lower profits or perhaps through lower wage growth”, she has said.
Thus the request for a rephasing of the new lower earnings threshold for employer NICs (£5,000 instead of £9,100) will surely be refused. Reeves knew the effect of the reform – the sums aren’t hard to calculate. This was a deliberate policy choice.
As for the packaging levy – £2bn from next October – it is highly unlikely to be deferred again, which is the retailers’ second request. And it may be too late already to revisit changes to business rates and bring them forward from April 2026 to April 2025, the third ask. So best not to hold your collective breath. If there is going to be a budget U-turn, farmers rather than retailers look the likelier beneficiaries.
Yet the letter-writers’ central point is undeniable: the £7bn increase will affect jobs, investment and prices in shops. Not all elements came out of the blue: a rise in the national living wage (£2.73bn) was already in companies’ planning budgets, or should have been. But the effect of the threshold change on NICs (£1.76bn) was large and unexpected and it is the top-up element that makes the difference. On cue, Andrew Bailey, governor of the Bank of England, more or less said the same. The NICs rise could result in a bigger reduction in jobs than the 50,000 projected by the Office for Budget Responsibility, he warned.
As argued here previously, smaller retailers will be more affected than the FTSE brigade since they have fewer cost levers to pull and less pricing muscle to pass on the hit to consumers. But the overall effect on high streets will surely be more shop closures and less investment. It is why a phased introduction of the earnings threshold would have been a smarter piece of policymaking. You get fewer knock-on consequences that way. The risk in a sudden adjustment is a confidence-sapping overreaction.
On business rates, the quieter complaint is that the Labour government simply isn’t consulting properly on the design of the 2026-27 reforms and is in danger of missing its manifesto promise to “level the playing field between the high street and online giants”. Until one sees the details, it’s hard to tell if Amazon will escape unscathed while others pay the same, just with a shuffle – but, in current circumstances, the Treasury has no excuse for getting the technicalities wrong.
Nobody is obliged to sympathise with the big firms but, as virtually everybody recognises by now, it is their customers and employees who bear the brunt of sudden increases in costs. As with the hospitality industry, retailers deserve a break.