Marks & Spencer chief executive Stuart Machin has called on the government to take “immediate action” and “lighten the burden that the Budget loaded on to the retail sector” if it wants to invest in retail’s future.
He also said retailers are being “raided like a piggy bank” as the sector tries to cope with rising taxes.
Writing in The Sunday Times, Machin pointed out that chancellor Rachel Reeves’ speech last month had some strengths such as long-term planning and ideas to free up investment in infrastructure, but she failed to address the impact of the Budget.
He said while retail “anchors the UK economy”, the Budget means “UK retail will get smaller”.
“At M&S we are growing, but others are not and there is no doubt that there will be fewer jobs, fewer shops and slower wage growth across the sector as a whole,” he said.
“The impact is being felt in the supply chain, too. UK food manufacturing and farming will contract, domestic products will go up in price and more food will be imported with potentially less stringent quality and environmental standards.”
The new national insurance contribution (NIC) increases, national living wage hikes and other budget policies mean around £7bn extra employment costs will be added to retail, which already pays an effective tax rate of 55%.
Machin said the measures in October’s Budget are contributing to low growth forecasts but he believes the government can take “immediate steps” to “reverse that malaise and drive growth”.
Machin called for four key moves, including phasing the NIC threshold changes over two years to help manage the impact. He pointed out that it was Next boss Lord Wolfson who suggested the idea.
He also said the government should delay the increase in extended producer responsibility fees and pause and review all Department for Environment, Food and Rural Affairs (Defra) circularity recycling schemes as they are “highly costly and nigh on impossible to operate”.
The M&S boss called for a “proper review” of business rates faced by retailers, and ensuring the Defra minister works with retail “not against it”, by co-creating a food strategy focused on growing British food production.
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