VAT ‘freezes’ are one way to keep shoppers coming

SHOPS in Eastbourne were emptier than usual as customers returned to work, schools went back and VAT rises hit the streets on Tuesday (January 4).

Despite sales’ hoardings clamouring for remaining shoppers’ attention, promising up to 80 per cent reductions, Eastbourne’s shopping thoroughfares were quiet as Chancellor George Osborne rolled out a 2.5 per cent rise in VAT to 20 per cent in a bid to tackle the deficit.

While some retailers in the town had already made the adjustments, a small number promised items would remain VAT free and others would phase in the increase later in the year.

Rebecca Westguard, store manager at Kids Stuff Toys in the Arndale Centre which has already increased its prices, said, “It’s not going to put people off because they are going to buy items anyway, It’s only a couple of pennies here and there.

“It always goes quiet after Christmas so the decline in footfall is to be expected.”

Jason Daniel, owner of the Lighthouse in Terminus Road which has introduced a VAT freeze, said, “I would have thought people would be watching their money but it depends on what they’ve got to spend.

“But at least if retailers are putting up signs saying ‘no VAT rise’ it’s not going to scare people away.

“The increase will add up over the year but you have to do these things for profit margins.”

Christina Ewbank, president of the Eastbourne Chamber of Commerce and retail sales director for Lookers Mercedes-Benz, played down the effect of the VAT rise and said a hike in interest rates is the real threat to Eastbourne’s retail economy.

She said, “For day-to-day items I do not think 2.5 per cent will make a huge difference.

“More of a concern is the uncertainty surrounding public sector jobs; the sooner that public sector organisations can make their decisions about cuts the better.

“I think people may be watching their pennies after the normal Christmas rush. However, businesses in Eastbourne tend to be very innovative and pro-active.

“With punchy marketing, they may be able to make offers to hold VAT for a while and stimulate the market they work in despite the January lull.”

The Centre for Retail Research and online shopping group Kelkoo forecast retail sales would suffer a £2.2 billion fall in the first three months of the year because of the VAT rise.

A report by the group also predicted average income families are likely to find themselves out of pocket by £520 a year.