Retailers push Osborne to take 'urgent action'

Retailers have urged the Chancellor, George Osborne, to abandon planned tax increases, saying he needs to "take urgent action" to support the embattled sector and grow the economy.

Ahead of the Government's Autumn statement tomorrow, the British Retail Consortium (BRC) demanded the Treasury abandon the increases to fuel tax planned for next year and keep business rates and the minimum wage "under control". The body also warned the Government against springing any surprise taxes after last year's £1bn carbon reduction commitment.

The demands were published as part of a report commissioned by the BRC studying "retailing's importance to kick-starting growth and job creation". This comes in a month where a series of retailers have come under pressure.

Stephen Robertson, the BRC's director-general, said: "We're not a sector that asks for handouts but the Chancellor must take urgent action to support, not undermine, the retail growth that can drive the recovery."

He added: "Eighteen months in, with the economy stalling, the need for the Government to deliver real growth – not just more promises – is all the more urgent."

Fears for the sector are growing ahead of the crucial final weeks of Christmas trading. Last week Blacks Leisure became the latest retailer to warn on profits. The outdoor retail specialist saw its shares plunge to an all-time low of 3.75p on Friday, and analysts estimated it would need to raise a further £20m.

A day earlier Arcadia, the owner of Topshop run by Sir Philip Green, said full-year profits had fallen 38 per cent to £133.1m. The group, which also includes Bhs and Dorothy Perkins, could close up to 260 stores over the next three years, as leases expire.

The BRC's latest retail market figures showed sales "flatlining", with the largest drop in footfall since the blizzards of last December. There are now 23,000 fewer jobs in the sector than a year ago.

Mr Robertson said the Chancellor "must control the costs he is responsible for – in particular next year's threatened fuel duty and business rates rises – and make it easier and more affordable for retailers to resume job creation".

The report, drawn up by Oxford Economics and the Oxford Institute of Retail Management, found that retailers delivered sales of £292bn in 2010, about a fifth of gross domestic product.

Retailers also employ just over 10 per cent of all those in jobs and 40 per cent of those under 20. The lobby group pointed out that retailers made a "substantial" contribution of £18bn a year to the Exchequer. The BRC said the findings showed that goods in UK shops were 5 per cent cheaper than in the Eurozone, with clothes 20 per cent lower.

The BRC slammed the "Red Tape Challenge", saying it "so far has failed to deliver any significant de-regulation".

Taxes and turmoil

British companies want the Chancellor to focus on slashing taxes to boost growth. More than half of the tax professionals surveyed by the accountant PwC believe the tax regime needs to be made more attractive, although many admitted the biggest barrier to growth was the turmoil in the global economy. Alex Henderson, a tax partner at PwC, said: "Economic turmoil is building anticipation ahead the Chancellor's Autumn Statement. There's a sense that 'something must be done' to get people spending and the economy moving. Tax cuts may provide the fastest route."

Of those surveyed by PwC, 27 per cent believe George Osborne should consider cutting VAT or income tax to lift spending. Almost 30 per cent believe the focus should be on attracting enterprise and talent to the UK.

Many companies believe the provision of credit should be a focus in tomorrow's statement, and almost a quarter were calling for red tape to be reduced.

Mr Henderson said: "Lack of credit and red tape are undoubtedly major issues for British business, but these problems are particularly acute for smaller and mid-sized firms, where they can make the difference between success or failure."