A city full of small businesses — what does York make of the budget?

The businesses lining The Shambles in York went all out for Halloween last week. Ghostly figures hung from the windows of the shops, which appeared to be propping each other up on this narrow, cobbled street, where the medieval architecture makes it one of the city’s biggest attractions.
However, for the entrepreneurs who ply their trade here, the real fright came the previous day — when chancellor Rachel Reeves delivered her maiden budget. Reeves unveiled a £25 billionpackage of taxes on business to repair what she described as the nation’s “broken” finances
Celine Poirot, 45, whose confectionery and macaroon shop opened just a week ago, was shell-shocked. She said the budget would have a “massive impact” on the business she runs with her husband, Florian, an award-winning pastry chef.
The three issues she cited will be at the forefront of the minds of business owners all around Britain: a 6.7 per cent rise in the minimum wage to £12.21 an hour; a rise in the rate at which employers pay national insurance contributions (NICs), from 13.8 per cent to 15 per cent; and a hike in business rates, which comes as a result of the chancellor’s decision to cut back post-Covid relief from 75 per cent to 40 per cent.
The triple whammy comes off the back of a brutal few years for small businesses, who have been battered by lockdowns and the most severe bout of inflation for a generation.
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Poirot, who was born in France, said that what made it all the more painful for a small businesses like hers, was that she had to deal with these three additional costs all at once. “The problem is, it’s not only one, it’s three different areas that are going to increase.”
She had yet to estimate the financial hit to her pristine new shop, which has been warmly welcomed by locals because it filled a long-vacant premises on the landmark street.
Phil Pinder had done the sums and reckoned he faced a bill of an extra £150,000 a year. He started his business, Potions Cauldron Group, on the Shambles six years ago, which sells soft drinks — or potions as he calls them — which were on display outside his shop with spooky names such as Basilisk Blood (mixed fruit) and Serpent’s Venom (lemonade). With another store in Edinburgh,as well as a wholesale business, and a small chain of mini-golf outlets, he employs 57 people.
Pinder, who goes by the job title of “chief wizard”, rattled off the extra costs, with £46,000 from the extra NICs, £60,000 in additional wages (he had already expected), and £50,000 from higher business rates. To handle the higher costs — which Pinder believes will amount to 4 per cent of his sales — he said he was going to have to raise prices for customers.
The Office for Budget Responsibility has estimated that the £26 billion Reeves expects to bring in from the NICs changes will lead to companies cutting wages and increasing prices.
York is one of Britain’s most vibrant cities. Each year, nine million visitorscome to enjoy walks along the River Ouse, visit the stunning York Minster or just soak up the city’s medieval history. The resulting trade for the city’s shops and restaurants mean that York’s high streets are not blighted by the same number of vacancies many other towns suffer from. The only glaring hole in York’s main square appeared to be a vacated branch of HSBC.
Last week, the city was humming with half-term visitors. Yet in the open market — where traders sell everything from handbags to flowers — business owners reported that while the streets may be busy, sales were not booming. One nearby shopkeeper said that visitors were “eating and drinking and going on holidays” but they were rarely seen carrying bulging shopping bags.
These stall holders are not so directly impacted by budget changes as they are often sole traders without NICs and minimum wages to worry about. And they pay fees for pitches, rather than business rates on a shop. But that is not to say the budget was not on their minds.
Dan Richardson, 48, who runs the Miss Pots Plant Emporium, which sells plants in bottles and jars, said that footfall in the market had recovered since the dark days of the pandemic but spending had not.
Now he is concerned that the rise in NICs will stop people getting pay rises, meaning they will be inclined to spend even less. “We get the same footfall on the weekend now but we’re already seeing people spending 50 per cent less,” Richardson said.
Across from his pitch stands fishmonger Andrew Kenny, who was surrounded by salmon, crab, haddock, and a splendid John Dory. “All of these things cobbled together are likely to have an impact. As with any of these things, there’s only one person who can pay — and that’s the consumer,” Kenny said.
On the other side of the city, in a venue built out of shipping containers, Jack Jenner, 22, runs Baby Boy’s Burgers, a food stall he opened at the start of the year. The young entrepreneur is concerned that his local suppliers in Todcaster, Harrogage and Skipton will raise their prices off the back of the punishing budget. Jenner has already raised his costs twice since opening. “I don’t want to put them up any more,” he said.
In a shop in a quaint Tudor-looking building, Emma Godivala, 53, was a little more relaxed about the fallout from the budget. Godivala, the co-founder of York Gin, had not fully figured out the impact but her instinct was that the budget was “not a disaster”.
She welcomed Reeves’ pledge for more money for the NHS and transport links in the north. “It’s easy to get here from London and Edinburgh, but it’s much harder to get here from Manchester,” she said. As an employer of about 15 people, she thought the rise in NICs might “put pressure on how many jobs we can offer”.
On another of the city’s pretty streets, Georgia Calvert, 27, was fretting about rises in business rates, the commercial tax levied on property. Calvert opened Avorium, the upmarket stationery shop she runs with her siblings, in 2021. Calvert, surrounded by pastel coloured note books, said: “We think that needs reform. Our business rates are going to double over the next year.”
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It was a point that Pinder wanted to hammer home. Labour had pledged to abolish business rates in its manifesto but was, in effect, doubling them.
Working out just how to tackle the changes to NICs was also a hot topic among the entrepreneurs of York. For employers, Reeves has cut the threshold at which NICs becomes chargeable on wages from £9,100 to £5,000 per employee. However, in an effort to make the changes less painful for the smallest businesses, Reeves has more than doubled the threshold at which they have to start paying NICs when their total NICS bill hits £10,500.
The Federation of Small Businesses has calculated that companies employing four people on the minimum wage are now better off, because the changes to the thresholds means they can now effectively employ an extra person without incurring NICs.
But for Calvert, who employs about 20 people across her stationery business, the changes “seemed to be incentivising having a larger number of people working for you on fewer hours to try to avoid the thresholds”.
And, for Pinder, it means he will be liable to pay NICs on the wages for 15 people, such as students, he employs, even though they do only a handful of hours a week.
Back on the Shambles, as the Halloween festivities continued, Poirot was determined the budget would not be a horror show for her new shop. “This does put pressure on the business,” she said. “But we just opened this shop and we know it will be successful.”