Wholesale sector to face over £110m in extra costs from new budget

Wholesalers are set to be landed with over £110m of extra costs per year as a result of the budget.

The Federation of Wholesale Distributors has calculated that its members will have to fork out an additional £110m per annum in direct wage costs after Chancellor Rachel Reeves announced the national living wage would go up by 6.7% to £12.21 from April 2025.

In addition to rising wages, they will also face £30.9m in employers’ National Insurance, after it increased by two percentage points to 15.8%, the FWD said.

“The increase in the minimum wage reflects the need to support workers amid rising living costs, and we remain committed to providing fair wages across our sector,” said FWD CEO James Bielby. “However, along with changes to employer National Insurance contributions, the new rates add an estimated £110m in direct wage costs to our sector. 

”At a time we should be incentivising businesses to turbocharge economic growth across the economy, almost a quarter of our members may now be forced to reduce investment in other critical areas of their business. Balancing fair pay with the need for growth and reinvestment is challenging, particularly with rising costs across the board.”

The organisation also called for a reform of the current business rates system to make sure wholesalers operating large premises were not forced “to shoulder a heavier burden than those in sectors with minimal property overhead”.

However he welcomed a number of other measures announced by Reeves. The decision to freeze fuel duty would provide “much-needed relief” for operators relying on transportation to deliver goods, he said. 

He also commended the government’s pledge to increase funding to tackle retail crime, and called for increased support to wholesalers, which require “the same level of attention and resources” to protect their businesses from rising theft in the supply chain.

“We are pleased to see a number of positive steps in today’s budget that will bolster the wholesale sector,” he said.

“Over the coming weeks, we look forward to working closely with the government to ensure that our members, who are central to driving economic growth, are given the support they need within an uncertain economic climate.”