Trade absorbs Budget measures

Trade absorbs Budget measures

Publishers and retailers could be affected by the introduction of a new National Living Wage, announced in Chancellor George Osborne’s summer Budget, delivered yesterday (8th July).

Richard Mollet, c.e.o. of The Publishers Association, said: “All companies will be looking carefully at the changes on the National Living Wage and the potential impact on pay-roll.”

The compulsory National Living Wage, which will reach £9 an hour by 2020, will be for people aged 25 and over. It will be introduced in April 2016 and start at £7.20 an hour, with the Low Pay Commission recommending future rises. Currently the National Minimum Wage for those aged 21 and over is £6.50. There is also a Living Wage, which is not compulsory, of £9.15 in London and £7.85 in the rest of the country.

Amazon, which has been the subject of public wage protests, could be affected. The lowest starting salary in its fulfilment centres is currently £7.10, 10p below the National Living Wage. However the majority of the company’s fulfilment centre staff are paid a starting wage of £7.20 or more an hour, and all get paid £7.35 or above after six months of work.

Sheila O’Reilly, owner of Dulwich Books, said the National Living Wage did not affect her, as she paid the London Living Wage. But, she added: “I am pleased to see a decent minimum wage being brought in for everyone.” 

Osborne also made reference to the recently announced consultation on Sunday trading hours, which could give counties and elected mayors the power to set Sunday trading hours in their areas. Waterstones m.d. James Daunt responded to this measure today, telling The Bookseller: "The extension of hours is welcome in some places but in others not. The welcome I presume is self-evident: shoppers want convenience and in many locations, such as out of town shopping centres, the longer hours will give this. The concern is the extent to which this change further harms traditional high streets. It may lead to yet further homogenisation: the big retailers will be better able to accommodate the burden of staffing than independents. It may draw shoppers yet more to the out of town centres and big box supermarkets. 

"Finally, as an employer of skilled booksellers of which an increasing proportion work full-time, the change is unwelcome. We need to keep our shops staffed by knowledgeable and experienced staff at all times and so these hours will be covered by them. No one I know likes working early or late on a Sunday. If councils consider all the issues sensibly in a local context, the change can be very positive, but it will not always be a simple judgement.”

In the Budget, Osborne also said that higher education institutions would be able to increase their tuition fees in line with inflation from 2017-18. A consultation will be held on the mechanisms for doing this, with more details to be announced. Mollet said: “With education institutions under pressure, any measures which seek to boost their ability to spend on resources should be welcomed.”

But Osborne also announced that maintenance grants, which are given to students from the lowest-income backgrounds, would be scrapped and replaced with maintenance loans, paid back when earnings exceed £21,000 a year. 

Bridget Shine, c.e.o. of the Independent Publishers Guild, said the removal of maintenance grants for the poorest students was a "deeply regressive move".

"Many people in publishing who have families will also be affected by changes to qualification for tax credits," she said. "The IPG has long campaigned for the widest possible diversity in publishing, and these moves can only discourage those from poorer backgrounds from entering it."

The government said supporting research was important, and it will also invest £6.9bn up to 2021 in infrastructure “to investigate the great challenges of today, whether domestic, international or in space”. Universities, cities, local enterprise partnerships and businesses will be invited “ to map strengths and identify potential areas of strategic focus for different regions through a series of science and innovation audits”. The government said it wanted “universities to strengthen local collaboration and will continue to reward proposals which build on regional strengths, including through funding streams such as the Research Partnership Investment Fund”.

The main rate of Corporation Tax, paid on companies’ profits, will be cut to 19% in 2017 (from 20%), and to 18% in 2020, “benefiting over a million businesses”.

Shine said that "independent publishers will welcome the reduction in the rate of corporation tax, as well as the 50% increase in National Insurance employment allowance for small firms".

"The rise in the top rate of tax on dividend income to 38% might encourage some publishers to sell their businesses and take advantage of the lower capital gains tax of 28%," she continued. "We are pleased to see action on new enterprise zones, which will help to spread investment around the country, and encouraged by the plans to improve and diversify access to finance for businesses."

Osborne also announced that HMRC would get an additional £750m “to go after tax fraud, offshore trusts and the businesses of the hidden economy”.

He said: “We’re going to change the law to stop the use of losses which abuse our controlled foreign companies regime, and make sure investment fund managers pay the full capital gains tax rate on their carried interest.”