High Street retailers are calling on the UK's Chancellor, John Healey, to reverse a National Insurance (NI) tax policy implemented by his predecessor, Rachel Reeves, arguing it has significantly contributed to job losses and financial strain on the sector. The British Retail Consortium (BRC) estimates that the policy change, coupled with minimum wage increases, has resulted in a £6.5 billion cost and the elimination of 115,000 jobs.
The policy, announced in 2024 and effective from April 2025, lowered the annual salary threshold at which employers must pay National Insurance contributions from £9,100 to £5,000. Simultaneously, the NI rate for employers increased from 13.8 percent to 15 percent. This change made employers liable for the tax on a larger portion of their workforce, impacting many part-time and younger employees.
The BRC attributes £1.74 billion of the sector's costs to the threshold adjustment alone. The trade body, representing major retailers like Sainsbury's and Tesco, has formally requested that Chancellor Healey raise the threshold to £6,000. They believe this adjustment would alleviate financial pressure on businesses and encourage them to increase hiring.
BRC chief executive Helen Dickinson stated that the retail sector is "uniquely placed to play a central role" in addressing the national challenge of young people who are neither employed nor in education. Retailers are presenting these requests ahead of the government's October Budget, with the administration having expressed a commitment to "restoring high streets and bringing back hope across Britain."
Dickinson emphasized that vibrant shopping districts are crucial for economic growth and improving living standards. However, she noted that higher employment costs, energy bills, packaging taxes, and business rates have hampered the industry's ability to invest, create opportunities, and foster growth. The upcoming Budget, she suggested, could serve as a "turning point" to help achieve the government's objectives for growth, employment, and revitalized high streets.
In addition to the NI tax reversal, retailers are also urging the government to address increased energy bills and ease rises in business rates. The Association of Convenience Stores echoed these concerns, advocating for controlled employment costs and workplace reforms that facilitate, rather than hinder, job creation. Retailers also expressed apprehension that forthcoming workers' rights reforms could introduce additional administrative burdens, making flexible employment more challenging for temporary and student staff.