While the charity retail sector continues to grow and innovate, it has faced a "tough" year due to rising business costs, particularly large increases in employer National Insurance contributions.
We want the Government to recognise the triple bottom line benefit the UK’s 10,100 charity shops generate. Charity retailers raise around £387 million annually for good causes, generating a massive £75.3 billion of social value, and are crucial to sustainability, saving local authorities over £34 million in annual waste costs from clothing reuse alone.
National Insurance
The biggest barrier to our sector’s expansion is the rise in workforce costs. The reduction in the employer’s National Insurance Secondary Threshold to £5,000 and the increase in employer contribution rates to 15% have placed charity shops under considerable financial strain. This change has already forced over one-third of charity retailers to indicate they would have to cut paid staff or reduce hours.
We need the Government to take steps to mitigate the impact of these decisions by:
Increasing the employer's National Insurance Secondary Threshold
Increasing the Employment Allowance
Business rates
We have long called for the Government to reduce the burden of business rates on our high streets as a way of boosting customer footfall. The Chancellor is likely to implement business rate reductions for high street retailers in this year’s Budget, which we have supported in our submission, but with the proviso that the reductions need to be substantial to have a meaningful impact.
For charity shops, we are urging the Government to financially support local authorities to grant discretionary rate relief for more charity shops, or to consider increasing the mandatory relief to 100%. We also need a fix for the legal anomaly that prevents some charity shops run through trading subsidiaries from qualifying for Charitable Rate Relief at all.
Reuse and social support
We also want support for a stronger circular economy through the implementation of an Extended Producer Responsibility (EPR) scheme for textiles. This scheme is essential and must include eco-modulation of fees to incentivise durable clothing and financial support for charity shops and merchants when handling clothing that is unsuitable for reuse.
Finally, we also call on the Government to use the Charity Shop Gift Card as a mechanism to distribute financial assistance to those in need. The card is a not-for-profit initiative, redeemable in 2,100 shops now and expected to increase to over 4,000 next year. Using it ensures funds go further, enables recipients to buy second-hand, and guarantees choice.
This Budget is an opportunity for the Government to support the long-term growth of charity retailers. You can read our full submission here.
