The Association of Convenience Stores has condemned the Chancellor’s failure to put in place meaningful support for the almost 7,000 local shops facing closure this year as a result of sky-high energy costs.
From April, the government will press on with untargeted, inadequate support for 12 months through the Energy Bills Discount Scheme, with a discount of 1.9p per kWh for electricity. This will reduce an average eligible convenience store’s energy bill by around £1,520 for the year. In total, support provided by the Government will equate to up to £60m across the entire convenience sector and £545m for all businesses.
Convenience stores that signed fixed contracts during the height of wholesale prices (Q3/Q4 2022) are those most likely to be at risk of closure, due to the tripling or in some cases quadrupling of their energy bills for the duration of the fixed term contract. There are up to 6,900 stores facing rates of 80-90p per kWh and above this year.
ACS has estimated that the Treasury will lose £70m in direct taxation per year from the closure of affected convenience stores alone, with much wider losses expected through indirect taxes like excise duties and VAT, as well as the loss of up to 46,000 jobs.
ACS chief executive James Lowman said: “A Budget focused on growth and investment will come as no comfort to those who will have their entire profit margins wiped out this year by excessive fixed energy contracts. Convenience stores have been left out in the cold by the Chancellor, being left to face crippling energy bills by themselves and putting thousands at risk.
“Difficult decisions will have to be made in the coming months by independent retailers about the future of their businesses, which will have a negative impact on investment and reduce the number of available jobs in communities, all while bolstering the profits of energy companies.”
Other announcements in the Budget include:
- Fuel duty will be frozen for 12 months
- Alcohol and tobacco duties will rise by the rate of RPI as planned, with the exception of draught relief in pubs
- Full capital expensing will be introduced for the next three years, with every £ a company invests in IT equipment, plant and machinery being eligible to be deducted from taxable profits
- The Government will offer “Returnerships” targeted at the over 50s who want to return to work
- Childcare reforms to make it easier for parents to return to the workplace