Business

Red tape and living wage "may force firms out of business"

Small businesses are being strangled by costs, including new wage plans, according to a group that represents the sector
Gary McDonald Business Editor

SPIRALLING costs continue to strangle small businesses in the north - and there's no light at the end of the tunnel.

For according to one business chief, neither Stormont nor Westminster is taking the already grim situation seriously, despite hundreds of firms potentially teetering on the brink of extinction.

Glyn Roberts of the Northern Ireland Independent Retail Trade Association (NIIRTA) has lambasted the "reckless" introduction of a compulsory living wage as having a "hugely detrimental" impact, leading to retailers having to reduce staff hours and ultimately cancel their investment plans.

And he has also taken a swipe at Environment Minister Mark Durkan for his "ludicrous" bottle return scheme which will only add an extra layer of bureaucracy and cost to small firms.

His comments come ahead of the launch today of the British government’s response to the 'Northern Ireland: Banking on Recovery' report, which business organisations fear may not fully address specific concerns small firms have around access to finance.

The NIIRTA chief executive said: "The Chancellor’s much trumpeted National Living Wage may be a popular measure for working families in Britain, but the Treasury has given little thought as to how small businesses and independent retailers here could afford a 40 per cent increase in their wages bills by 2020.

"Its introduction will have a detrimental impact on retailers in Northern Ireland, and to introduce such a measure with no consultation undermines the independent Low Pay Commission and is a reckless way to impose a massive burden on small businesses."

It came as home furnishing giant Ikea revealed yesterday that it will become the first national retailer to adopt the Living Wage from next April, when its workers across Northern Ireland will receive a minimum of £7.85 an hour.

The company's UK and Ireland manager Gillian Drakeford said it was "not only the right thing to do for our co-workers, but it also makes good business sense".

Mr Roberts added: "I also have concerns that the proposed increase in the Employment Allowance to £3,000 for independent retailers, while positive in itself, is unlikely to fully off-set the increase in costs brought by the new over 25s National Living Wage rate.

"If the Chancellor is serious about supporting small businesses being able to afford this, why not offer a matching income tax allowance, pound for pound for small businesses to off-set this increase?

"This raises a wider question of the high cost of doing business in Northern Ireland.

"Many of our members are still paying the highest energy costs in the UK, plus a large number took a serious hit in the recent rates revaluation.

"Added to this, we have a retail planning system that still gives an unfair competitive advantage to large out of town hypermarkets," Mr Roberts said.

In a pop at Mr Durkan, he added: "His plans to introduce a bottle return scheme - to be collected, administered and processed by small retailers - is another example of the increasing cumulative impact of red tape and regulation.

"There was no thought given or even consultation about the increased staff costs or extra storage space. It is this type of burden of extra cost and bureaucracy that local businesses simply do not need as we move slowly toward recovery."

The NIIRTA head, in a hard-hitting statement, said the "elephant in the room preventing progress" locally is the ongoing budget and welfare crises.

"These are creating unwelcome political instability at a time when the economy should be the central focus of the Executive," he said.

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