Labour reshapes the retail landscape, and not for the better

The Herald Scotland

07-07-2025

These measures are costing UK retailers £5 billion this year. Indeed, the cost of employing people in entry-level jobs has risen by over 10% for full-time and 13% for part-time workers, reducing future job availability.
That will also lead to change, but not for the better. We estimate these increases will threaten 13,000 part-time jobs in Scottish retail over the next three years.
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This matters: flexible retail roles are a vital stepping stone for many, whether it's a first job out of school or a part-time role for those returning to the workforce or with caring responsibilities. Public policies which reduce job opportunities in retail and scupper the first rung back onto the career ladder for many fly in the face of the government's welfare reforms which aim to bring more people back into the workforce.
The cumulative burden of public policy is weighing on the industry, holding back investment in skills and high streets. More is in the pipeline with the Employment Rights Bill and the new extended producer responsibility for packaging levy. Any further tax hikes in this autumn's UK Budget could make things trickier still.
Furthermore, some of the challenges – such as sluggish growth – have frankly been added to by ministers themselves. Last summer government figures were keen to hammer home a message about the poor state of the public finances they had inherited, underestimating the negative impact that would have on consumer sentiment.
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Added to the government's own decisions are those outwith its control, including international instability and the more volatile economic policy choices of the US, which have enormous implications. To alleviate international tariffs UK ministers have moved swiftly and positively to conclude trade deals with the USA, EU, and India, which should help keep down prices for consumers.
Sir Keir's government has sought to tackle many of the urgent economic issues facing the nation. In addition to the trade deals this can be seen in the consequential announcements on energy and transport infrastructure and planning.
A long-standing issue for retailers has been the onerous business rates system. The business rate is at a 26-year high and has to be paid regardless of profitability. From the Exchequer's viewpoint it's a steady source of revenue even during turbulent economic times. Reform has therefore proven difficult.
To the UK government's credit they've accepted the retail industry pays too much and plan a permanent rates reduction for England's shops, beginning in April.
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That said the government needs to sand down the roughest edges of the proposals, including the misbegotten notion that larger anchor stores should be saddled with a rates surcharge to help fund the changes. This would simply make high street rejuvenation more difficult. Meanwhile, whether Holyrood will cut retailers' rates bills remains unclear.
Ministers are making good on their pledge to reform the Apprenticeship Levy. This is being rebranded as a growth and skills levy and retailers operating in England will be able to spend the receipts on a wider range of training for staff.
That's good for retailers operating down south, including Scottish headquartered firms like Dobbies Garden Centres and Schuh. Unfortunately, here in Scotland the levy seems set to remain little more than a tax on employment, hampering retailers' investment in skills.
Unlike counterparts down south, retailers here are unable to spend any of the £15 million they stump up annually for the levy. Ministers risk fumbling the chance of reform that benefits Scots employers too.
A year into their term in office the Labour Government can point to some solid progress but with the key yardstick being economic growth, the jury is still out on whether they can deliver.
David Lonsdale is director of the Scottish Retail Consortium.