Businesses in Hitchin, a market town in Hertfordshire, are feeling the strain as new budget measures come into effect. With rising costs from increased taxes and wage hikes, local retailers and hospitality firms are struggling to maintain profitability and consumer confidence.
Key takeaways
- Local businesses are facing significant cost increases due to new budget measures.
- The National Insurance rate is set to rise, impacting payroll costs.
- The minimum wage for workers is increasing, further straining small businesses.
- Many retailers are experiencing a drop in foot traffic and consumer confidence.
Rising costs for local businesses
The recent budget announced by the government has introduced several changes that are set to impact small businesses significantly. Key changes include:
- National Insurance (NI) Increase: The NI rate will rise to 15% on salaries above £5,000, up from 13.8% on salaries above £9,100.
- Minimum Wage Hike: The legal minimum wage for over-21s will increase from £11.44 to £12.21 per hour, while the rate for 18 to 20-year-olds will rise from £8.60 to £10.
- Reduction in Business Rates Relief: The pandemic-related 75% relief on business rates will be reduced to 40%.
These changes are expected to add thousands of pounds to the operating costs of local businesses, which are already struggling to recover from the pandemic.
Impact on local retailers
Charlotte McCrossin, manager of Gatwards, the oldest family jeweller in the UK, expressed her concerns about the current climate. With foot traffic declining, she noted, "There is no confidence now – consumers are worried." The jeweller’s business rates have increased by £7,500, and the rising NI contributions are compounding the financial strain.
Similarly, Tom Weller, co-owner of a local gastropub and café, reported a £40,000 increase in payroll costs due to last year’s minimum wage rise, with expectations of a similar increase this year. He stated, "If we didn’t raise prices, we’d just be losing money every month."
The broader picture
The situation in Hitchin reflects a wider trend across the UK, where approximately 27,000 shops closed in 2023, with 7,800 being independently owned. The Federation of Small Businesses has highlighted a growing uncertainty among small firms, leading to a reluctance to hire new staff or expand operations.
Tom Hardy, Hitchin’s town centre manager, warned that without intervention, many high streets could face extinction in the next five to ten years. He emphasised the need for more support to ensure that businesses can thrive in a competitive environment.
Government response
In response to the concerns raised by local businesses, a spokesperson from the Treasury stated that the government is committed to improving the business environment. They highlighted measures such as protecting small businesses from the NI rise and capping corporation tax as steps towards supporting the retail sector.
However, many business owners remain sceptical about the effectiveness of these measures, calling for more substantial support to address the challenges they face.
As Hitchin’s businesses navigate these turbulent times, the community’s support and government action will be crucial in determining the future of the town’s high street.
