Retailers call relief budget 'deckchairs on the Titanic' as costs bite

One pub operator pays 83% of its profits in tax. That figure, from James Nye, managing director of Anglian Country Inns, frames how Britain's high street businesses judged John Healey's first budget as chancellor.

Nye runs 10 venues across Norfolk and Hertfordshire and employs 500 people at the height of the season. He watched Healey's statement carefully on Wednesday. Two previous Labour budgets under Rachel Reeves had loaded extra costs onto his business.

His verdict on the relief was blunt: "It is like letting the tyres down and then handing you a pump."

What did the chancellor actually change?

Healey aimed to help high street operators in three ways:

• He removed the business rates burden from more small businesses.
• He capped rates increases at inflation for two years.
• He limited the rise in the minimum wage for younger workers.

He also clamped down on VAT dodging by online sellers. Some business owners argued the chancellor could have gone further.

Why does Pets Corner call it 'deckchairs on the Titanic'?

Dean Richmond owns Pets Corner, a chain his parents founded in 1968. The Crawley-based business now employs 1,200 people across 159 stores. He says the budget has not fixed the "fundamental problem": costs rising faster than sales.

He expects little benefit from the higher threshold at which business rates begin to be paid.

"It's a bit 'moving the deckchairs on the Titanic' on rates. There has to be a bolder shift if the government is going to help offline retail," Richmond says.

He welcomed the move to make online marketplaces such as Amazon collect VAT from more sellers. But he was disappointed that Healey did not bring forward the end of tax breaks for online sellers such as Shein and Temu, which import cheaper items from overseas.

"It feels like the world's against us. When offline retailers all but disappear the world will miss us," he says.

Richmond describes Reeves's budgets as "really damaging" and this one as "safe but isn't going to change anything".

How did the wage rise land with employers?

"It is not a good news budget with the minimum wage going up," Richmond says. That rise comes on top of previous changes to employers' national insurance contributions and earlier large increases in the minimum wage.

Pets Corner has already made "pretty drastic cuts" to headcount and reduced bonus incentives. It has shifted to hiring older, more experienced people because there is less incentive to hire new starters.

Spencer Hannah, co-founder and owner of Herdy, reports similar pressure. Herdy has five shops in Cumbria, sells cartoon sheep-branded homewares and clothing online, and supplies other retailers in the UK and overseas. It employs 28 people directly.

"The chancellor's key narrative was that he wanted to support British businesses doing business with Britain and we applaud and support that," Hannah says.

But he says the budget lacked the "seismic difference" UK retailers and their local suppliers needed. He welcomed rates relief for smaller shops but says it was "not counterbalancing what's happened in the last two years".

"Like everybody else running small and medium-sized enterprises, life has got slowly harder over the last two budgets and some poor choices have been made by the [last] leadership in government," Hannah says.

Higher national insurance, minimum wage, rent and energy costs have weighed on Herdy directly. The "most frustrating thing", he says, is the impact on his domestic suppliers. He has been forced to ditch some of them, including his mug manufacturer in Stoke, and look abroad.

What does the tax burden mean for hospitality?

Nye says the budget made a "couple of steps towards helping" against a very tough backdrop. He welcomes rates relief for smaller venues but says it is unlikely to assist Anglian directly. The legal minimum wage rise from April will more than offset the rates change for most operators, he argues.

He also flags two missed opportunities: no VAT cut for hospitality and no national insurance cut for younger workers.

Nye hopes Healey's support for household energy bills "might help consumer confidence". But he added: "We were expecting a little bit more to offset the massive tax increases hospitality has faced."

Can the sector absorb another cost cycle?

Nye's complaint is mechanical, not rhetorical. Every minimum wage rise now triggers a second tax bill, because the NICs threshold has not changed while the rate has gone up.

"I don't mind paying people more, but we're then being taxed on it because the NICs threshold hasn't changed, and the rate of NICs has gone up, so every time that the national minimum wage goes up, we're paying more and more in tax," he says.

His closing warning sets the stakes for the next budget: "The cost of going out is getting more and more expensive. My biggest fear is that hospitality starts becoming a luxury rather than a convenience."