Budget 2024: Chancellor's changes to business rates and minimum wage 'set to hit booksellers' profits'

Chancellor Rachel Reeves today delivered the first Budget by a Labour government since 2010 with changes to minimum wages, a reduction in business rates relief and increased National Insurance for business owners set to affect bookshops.

Pledging to “invest, invest, invest” to drive economic growth and boost living standards, Reeves repeatedly highlighted a £22bn “black hole” inherited from the last government. She raised taxes by £40bn, which she said would “restore stability to public finances and rebuild our public services”.

Reeves confirmed sticking to the Labour manifesto pledges not to increase National Insurance, VAT or income tax. But she did confirm that employers’ National Insurance will go up by 1.2% to 15% from April 2025, in order to raise £25bn a year for the government. 

She said National Insurance employment allowance will go up from £5,000 to £10,500. She said this will mean 865,000 employers won’t pay any NI next year and more than one million will pay the same or less than previously.

Reeves said: “This will allow a small business to employ the equivalent of four full-time workers on the National Living Wage without paying any National Insurance.”

Reeves also confirmed yesterday’s announcement that National Minimum Wages will increase in April, with rates for over-21s set to go up to £12.21 an hour. The National Minimum Wage will also rise for people aged 18 to 20 years old, going from £8.60 to £10.

Earlier this year bookselling industry leaders called on the new government to reform business rates. However, Reeves today confirmed that the 75% discount to business rates which is due to expire in April 2025 will be replaced by a discount of 40% – which applies up to a maximum £110,000 per business.

David Headley, owner of Goldsboro Books, told The Bookseller: “Reducing business rate relief to 40% from 75% and increasing company national insurance will hit our business profits. Unlike other companies, bookshops can’t just raise prices like other businesses, and these increases will make a difference in how we invest in the future. I understand that we want better services for our communities, and we know we can’t continue the way we have. I await the full Budget details to see if there is anything positive for small businesses and bookshops, but I fear there will be none.”

Sam Taylor, co-founder and bookseller at Max Minervas, told The Bookseller: “The increase in minimum wage is both a welcome sign that the government wants to help the lowest paid and a challenge for bookshops’ bottom line. We’ve kept increasing wages in line with Living Wage Foundation since we opened as it’s the right thing to do. But, when increasing wages combine with the ever-upwards trajectory of all the other costs of book selling – business rates, utilities, rent, postage, shop materials etc - and our inability to increase the price of what we sell, the margins are getting thinner and thinner. We just have to hope that the extra money heading into people’s pockets from the wage increase will encourage them to buy more books.” 

Bridget Shine, c.e.o of the Independent Publishers Guild, told The Bookseller: “Some difficult decisions were inevitable after the chaos of the last few years, so it’s not surprising that there is little in the Budget to cheer businesses. The increase in employers’ National Insurance contributions is bound to have some impact on job creation and pay. A freeze on income tax thresholds is steadily increasing the tax burden on lower paid workers, but news that it won’t be extended is welcome. Other tax measures feel appropriately targeted."

She added: "Predictions of lower inflation and interest rates and higher economic growth are more encouraging. Extra investment in public services will be modest help for the publishers serving them, and some continued relief on rates is helpful for high street booksellers. On the academic publishing front, it is welcome news that funding for UK research and development will be protected, to drive innovation. Hopefully the promise of no return to austerity is kept, and the challenging aspects of the Budget have been so heavily trailed that prospects for the economy, businesses and consumers may turn out to be better than expected.”

Dan Conway, c.e.o of the Publishers Association, said: “This historic budget – the first by a female Chancellor and the first by Labour in 14 years -  was always going to present a challenge to the new government as it seeks to address the nation’s funding gap, while at the same time trying to shore up public services and encourage economic growth."

He added: "It’s good to see the creative industries, of which the £11bn publishing sector is a cornerstone, heralded as one of our nation’s growth sectors and we welcome the government’s commitment to record funding levels for R&D, protecting association to the Horizon programme and ensuring that the UK remains a global leader in research. The increase in core budgets for schools is welcome, as is the commitment to providing £3m to expand the Creative Careers Programme.

“However, the major headline for publishers – as with every business – will be assessing the impact of the Chancellor’s National Insurance rise, which will bring substantial additional costs in the year ahead.”

Authors’ Licensing and Collecting Society, c.e.o Barbara Hayes, said: "It is good to see today’s Budget include funding for cultural infrastructure, but we have seen authors’ incomes decline for many years, while the UK creative industries, which is reliant on their work, continues to be a growth sector. The economic contribution of the UK creative industries grew to £124.6bn, employing 2.3m people across the entire country. Its importance cannot be understated, and measures are needed to establish compensation to those creators that underpin it."

She added: "Ultimately, authors need remuneration to make a living from their work. We hope that the Government will now look at measures to ensure authors are paid fairly for their work. Today’s budget recognises the value of the creative industries and of investing in culture, but we hope the new Government will work with creators’ representatives to ensure that the people whose works drive our creative industries forward can continue to make a fair living from their work."

Caroline Norbury, c.e.o of Creative UK, said: “The cultural and creative sectors remain a main driving force behind the UK economy, delivering growth and social value, while fuelling local communities, creating jobs, and showcasing the best of Britain to the world. We welcome the UK government’s commitment to publishing a comprehensive sector plan for the cultural and creative industries, as part of Phase 2 of the Spending Review; and look forward to assurances from the government that our sector will be stimulated to drive inclusive growth through a quantum of investment, alongside other high-growth areas. The UK government has already recognised the significant potential of the cultural and creative industries and as it builds on the momentum set by the Industrial Strategy, it needs to translate this recognition into strategic, meaningful action. This should be the beginning of a long-term commitment from the UK government to fully realise the economic and societal impact that culture and creativity can deliver, in partnership with the sector...Creativity isn’t not only a driver of prosperity, but opportunity to define who we are, our place in the world and how we innovate to transform lives. Now is the time to build a future where creativity is respected and embraced as central to our national identity and success.”

Got something to add to this story? Email your reaction to the Budget to matilda.battersby@thebookseller.com