The UK's chancellor Rishi Sunak announced the UK Autumn Budget and Spending Review on 27 October 2021. Here is Just Style's round-up of how it could affect the UK apparel industry and beyond.

Just Style reveals what a UK autumn budget described as providing a “stronger economy for the British people” and “stronger growth,” means for the apparel industry and global supply chains.

Sunak kicked-off his speech by stating the UK has “stronger public finances, with our debt under control. Stronger employment, with fewer people out of work and more people in work. Growth up, jobs up, and debt down.”

What does the UK autumn budget mean for the wider apparel industry?  

1. Autumn budget: Help and support for the wider apparel industry supply chain 

Sunak explains that as the global economy has reopened, inflation has risen around the world, including in the UK. This is due to demand for goods recovering more quickly than supply can immediately meet, which has put pressure on global supply chains and led to higher prices for energy, raw materials and goods.

The UK government has said it is committed to working with international partners and businesses to ease these issues and has taken action to support those most acutely affected by increases in the cost of living.

The UK government also explained it is taking action within the UK to ease pressures and support supply chain affected businesses. Transport pressures including container shipping have not yet started to ease and prices for certain commodities, raw materials and components remain high. Where there are issues that are unique or acute in the UK, the government said it will continue to take appropriate action.

There is a shortage of Heavy Goods Vehicle (HGV) drivers in the UK, however, the government stated the number has fallen by 39,000 between June 2019 and June 2021.

18 businesses have used an apprenticeship system to train new drivers, and the government also said it is taking action to support the haulage industry, including:

• Investing GBP32.5m (US$44.7m) in roadside facilities for HGV drivers on the road
• Investing in new skills bootcamps to train an additional 5,000 drivers
• Increasing the number of HGV driving tests available by up to 50,000 each year
• Freezing vehicle excise duty (VED) for HGVs and suspending the HGV road user levy for another 12 months from August 2022
• Relaxing cabotage rules temporarily for international HGV journeys within Great Britain to provide greater resilience for supply chains
• Issuing up to 5,000 short-term temporary visas for food and fuel haulage drivers to work in the UK.

2. Autumn budget: Rising wages for those working within the UK apparel industry

The UK government said it remains committed to raising the National Living Wage (NLW) so that it reaches two-thirds of median earnings. From 1 April 2022, the National Living Wage will rise to GBP9.50 per hour. The UK government said this forecast real-term pay increase will help support the living standards of millions of low paid workers, and is consistent with the government’s long-term ambition for the NLW to reach two-thirds of median earnings and apply to workers aged 21 and over by 2024, provided economic conditions allow. The government is also increasing the National Minimum Wages, so young people and apprentices will also see pay increases.

3. Autumn budget: Encouraging global shipping to be based in the UK

The Autumn budget aims to make it easier for shipping companies to move to the UK. It was announced that there will be substantive reforms to the UK’s Tonnage Tax regime for the first time since it was introduced in 2000. These reforms aim to increase the number of firms basing their headquarters in the UK, boosting the UK’s world-leading maritime services industry, which could benefit the apparel industry.

4. Autumn budget: Increasing apparel trade across the globe

The UK is charting a new course as an independent trading nation. The Autumn Budget is providing a GBP67.6m ($93m) cash increase for the Department for International Trade (DIT) over the Parliament to enable the government to transform its services for exporters and investors, maintain increased capacity to secure world-class free trade agreements and continue to support the rules-based international trading system. This will enable the finalisation of free trade agreements with Australia and New Zealand and the continued pursuit of new agreements with the US, the Gulf Cooperation Council, Canada, Mexico and India, as well as UK membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

The government is designing a border that simplifies processes for traders and travellers and helps to uphold the security and biosecurity of the UK. The budget has promised to provide over GBP1bn ($1.38bn) of funding for new transformational programmes, including GBP180m ($247.6m) to build a UK Single Trade Window which will reduce the cost of trade by streamlining trader interactions with border agencies.

The government has also said it will consult in the New Year on customs processes, the intermediaries market and transit to seek the views and expertise of businesses and ensure that government and industry can work in partnership together to deliver a world-class customs regime.

5. Autumn budget: Reducing business rates for apparel retailers in the UK 

Up to 400,000 retail, hospitality and leisure properties will be eligible for a new, temporary GBP1.7bn ($2.3bn) of business rates relief next year. This will provide support until the next revaluation, helping the businesses that make UK high streets and town centres successful evolve and adapt to changing consumer demands. Apart from reliefs in response to Covid-19, this is described as the biggest single-year cut to business rates in 30 years.

The UK government also said it is freezing the business rates multiplier in 2022-23, a tax cut worth GBP4.6bn ($6.3bn) over the next five years. This is said to support all ratepayers, large and small, meaning bills will be 3% lower than without the freeze.

Mixed reaction from British Retail Consortium (BRC)

Responding to the Chancellor’s Budget announcement, Helen Dickinson OBE, chief executive of the British Retail Consortium, said retailers will struggle to share Sunak’s confidence after a budget that does not do enough to reduce the burden of costs bearing down on UK shops, high streets and communities.

She said: “This budget is a missed opportunity for retail and the three million people who work in the industry, and it prevents retail from maximising its contribution to the government’s levelling up agenda.”

BRC on business rates:

Dickenson said: “While the government’s 50% bridging relief for 2022/23 may prove to be beneficial for the smallest businesses, it will do little to support the businesses that pay two thirds of retail business rates and employ 1.5 million people. With no reduction in the burden, this will lead to the unnecessary loss of shops and jobs and fails to incentivise investment in all parts of the country. This is bad news for every member of the public who wants a vibrant high street in their local community, with retail at its heart.”

BRC on the National Living Wage:

“The retail industry strongly supports the intention to raise wages in the industry and has been working hard in recent years to secure the productivity improvements needed to ensure such increases are sustainable. Currently, retailers are grappling with an assortment of government-imposed costs – higher National Insurance Contributions, higher Corporation Tax, sky high business rates – at a time when sales are slowing and supply chains are experiencing significant disruption. Unfortunately, the combined impact of additional costs will add to the pressure on prices – with three in five retailers saying that prices will rise before Christmas.”

BRC on supply chains:

She said: “Positive news for our nation’s HGV drivers. The BRC strongly supports the investment in lorry driver facilities around the UK, and we hope this makes lorry driving a more attractive career to those who may be considering it, as well as helping to retain those hardworking drivers already in post.”

By Just Style