Six things optometry would like to see in the Labour government’s first Budget

With the context of a much discussed £22 billion black hole lurking over her shoulder, the Chancellor this week confirmed that she has agreed cost-cutting settlements with every government department – through the celebratory popping of various balloons at Treasury HQ.

Between balloon popping, however, Reeves has been vocal about not returning to austerity – and about rebuilding public services and the economy at the same time.

It’s a big ask, and one that will take some extremely careful balancing of the books (or balloons?)

So, what could the Budget mean for small businesses – and what policies and investments does the optometry profession most want to see?

As Reeves preps her cue cards, rumours abound: could we see an increase in employer national contribution payments? What about Fuel Duty, which hasn’t risen in 12 years? Maybe an ‘Amazon tax,’ stinging tech giants in order to give a much-needed boost to High Street retail?

Here, OT presents a snapshot of the profession’s wish list ahead of the upcoming Budget. 

1 Gradual policies supportive of steady growth

The business-minded that OT spoke to urged a cautious approach.  

Luke Wren, chief development officer at Hakim Group, believes there “are several key areas that need addressing to support optometry practices and the broader optical sector.”

Recent uncertainty around the Budget has caused concern, despite a generally positive level of business confidence, Wren shared.

“Over the past 18 months, we’ve seen continuous improvements in consumer confidence, albeit from a low base, which is closely tied to consumer spending,” Wren said.

“However, the potential for sudden policy changes, particularly around taxes, could spook the market and halt progress. The last thing our sector and the wider economy needs is a repeat of the turmoil caused by rushed political decisions as we experienced towards the end of 2022.”

He added: “We hope that the Government introduces policies that are gradual, well thought-out, and supportive of steady growth, rather than opting for a headline grabbing revolution.”

We hope that the government introduces policies that are gradual, well thought-out, and supportive of steady growth rather than opting for a headline grabbing revolution

2 Confidence for future investment

Wren’s colleague, Martin Ashcroft, chief financial officer at Hakim Group, outlined some specifics around the consideration and support he hopes to see when it comes to small business owners. 

“A crucial issue for optometry practices is the potential impact of further increases in National Insurance (NI) and minimum wage,” Ashcroft said.

“These costs have been rising at double-digit rates, placing significant pressure on business owners.”

He added: “The optical sector, like many others, relies on skilled team members, and we need the confidence to invest in our workforce without being taxed excessively for doing so. Any increase in these areas acts as a tax on employment, which could hamper growth and sustainability.”

Andrew Bridges, director of professional services at Leightons Opticians & Hearing Care, noted that salary increases are important to support employees’ quality of life – but that “year-on-year living wage increases will have a knock-on effect.”

“The potential of increased employer NI contributions will exacerbate this,” he added.

Ashcroft is also urging the government to reconsider how they assess long-term investments and the return on state spending.

“Borrowing more to invest in sectors like healthcare can provide significant long-term benefits, including boosting GDP and creating jobs,” he said.

“If there is indeed a fiscal gap, we hope the Chancellor will adjust borrowing rules to ensure the optical sector can continue to thrive while maintaining affordability for patients.”

He noted that inflation has been “challenging,” but that rates now being closer to the Bank of England’s 2% target means “an opportunity to stabilise prices and focus on delivering value and quality service to patients.”

“We hope the upcoming Budget provides clarity and confidence for businesses to continue investing in the future,” Ashcroft said.

Borrowing more to invest in sectors like healthcare can provide significant long-term benefits, including boosting GDP and creating jobs

3 Pro small business measures

Policy chair at the Federation of Small Businesses, Tina McKenzie, agrees that small businesses need encouragement.  

“Small firms are eager to grow, but they need the right policies in place to make that happen,” McKenzie said.

“The upcoming Budget gives the Chancellor a key opportunity to introduce a range of pro-small business measures.”

McKenzie added: “Opticians would benefit from an increase in the Employment Allowance in line with the National Living Wage, as would the reintroduction of the Statutory Sick Pay small employer rebate.

“If the Government can bear down on employment costs it would enable them to keep their workforce even when wages rise and cover the cost of staff absences.”

Increasing the Small Business Rates Relief threshold from £12,000 to £25,000 would provide significant support, especially for small, independently run optical practices in “prime retail locations where footfall is crucial,” McKenzie added.

“All this would ease financial pressures to allow opticians to invest in better technology, such as diagnostic tools, keeping their practices competitive, and improving services for their customers,” she believes.

4 Consideration of discretionary spending

Bridges is concerned about the amount of spare cash (or lack thereof) that consumers might feel they have in their pocket. 

“Consumer confidence has weakened, and this has the potential to reduce discretionary spending in the optical sector, which may be considered by some as a discretionary or even grudge purchase,” Bridges said.

“Monetary policy is a key influencer, with the Bank of England increasing interest rates significantly to slow down post-COVID-19 consumer demand and economic growth and inflationary pressures.”

He added: “Whilst there have been numerous public sector pay increases, this may not be mirrored widely across the private sector, and these pay increases may also lead to higher prices for goods as services.”

Bridges also believes that the removal of the Winter Fuel Allowance will have an effect on quality of life for older consumers, and for others potentially reduce discretionary spending on ‘nice to haves.’

5 A continued freeze to Fuel Duty

Inflation has meant higher operating costs for optical businesses, Bridges said.  

He added that, “wherever possible, we [Leightons] limit how much of this is passed onto the consumer.”

Leightons has actively sought to gain improved energy deals and has switched its car fleet to electric vehicles, Bridges shared.

However, he noted that “we will need to see how vehicle taxation and potential Fuel Duty charges will affect us as employers and consumers alike.”

Fuel Duty has been frozen since 2012, and was also temporarily cut by 5p in 2022. The Government may discontinue this cut in next week’s Budget.

Bridges added: “Everyone will be concerned about the potential for a rise in fuel duty, and the inflationary pressures this is likely to cause households and businesses, due to the significant impact on shipping and postal charges.”

6 Better funding across the NHS – and a specific mention for the GOS fee

Leaving businesses and tax questions aside, a top priority for the Labour Government in the just over 100 days since it was elected has been the NHS. 

Junior doctor pay rises and national conversations around reforming healthcare would suggest that we are unlikely to see significant cuts to the service – but whether specific investments are laid out by Reeves will remain to be seen.

Investment in the NHS is high on the wish list for Linda Southin, operations manager at independent optometry practice group Edmonds & Slatter – but if she is feeling optimistic, there is another thing that she would like to see included too.

“It’s clear that the Optometric Fees Negotiating Committee is doing an excellent job in trying to negotiate a higher NHS test fee from the Government,” Southin said. “It would be a welcome and unexpected surprise if this was included in the upcoming budget.”

She added: “That said, better funding for all areas of NHS healthcare is always beneficial, as optics is never an isolated branch of medicine. Patients’ needs are often connected to hospitals, GPs, and other medical departments.”

Bridges noted that the Government appears to be focused on primary care. Like Southin, he also raised the ongoing question of the General Ophthalmic Services (GOS) fee.

“Bringing patient care into the heart of communities and having nationwide contracts is key,” he said. “Services supported by appropriate fees will aid patient care and remove the current postcode lottery across England, and hopefully equalise care across the nations.”

“In addition to this, it will be very important to see the future approach to GOS sight test fee, which has been neglected and should have a full and appropriate price point.”