More than one-quarter of charities that run shops say they might have to scale back their retail operation because of the increase in employers’ National Insurance contributions, according to a new survey by the Charity Retail Association.
Last week, Chancellor Rachel Reeves confirmed that the government would not provide exemptions for charities to the 1.2 percentage point increase in employers’ National Insurance, which the National Council for Voluntary Organisations has estimated could cost the voluntary sector £1.4bn per year.
The CRA said a typical charity shop has between 1.5 and two full-time-equivalent employees, which could mean an increase of about £1,000 a year per store.
“Considering larger shops and non-shop charity retail staff, we estimate that the cost could reach as much as £20m a year for the whole charity retail sector.”
Of the 52 charity retailers who responded to the survey, 36 per cent said they would have to reduce paid staff, 35 per cent anticipated having to reduce paid hours and 21 per cent reduce trading hours.
The survey showed that 38 per cent of respondents said they would have to scale back plans to open new shops and 67 per cent would have to put up prices.
Robin Osterley, chief executive of the CRA, said: “We are of course aware that the government is facing some extremely difficult choices, but it seems a shame that raising money by impacting charities, and specifically charity shops, should be part of their thinking.
“Our survey shows that charity shops, which form such a hugely important part of the circular economy and which provide an invaluable source of inexpensive goods for hard-pressed households, will be severely impacted by these changes, and we are calling on the government to take steps to mitigate this.
“The National Insurance increase will cost a typical charity shop around £1,000 each year – some of this cost will be recouped through higher prices but ultimately the result will be less money raised to support charitable services.”