It’s been just over a month since Labour unveiled its first fiscal Budget since winning the General Election this year.
Chancellor of the Exchequer Rachel Reeves’ Budget, which introduced measures including increased employer contributions to National Insurance, minimum wage rises and new packaging levies, was met with outrage by many business leaders – many of whom had been supportive of Labour during its election campaign.
The British Retail Consortium (BRC) went so far as to compose an open letter to Reeves warning that jobs will be lost, stores will shut and prices will have to rise in the wake of her controversial first Budget.
Over 70 retailers including Tesco, Sainsbury’s, Next, Amazon, and Boots are signatories on the BRC’s letter, which forecasts that the changes could raise the sector’s costs by up to £70bn per year.
But a small but vocal minority of retail leaders have also come out in support of Labour’s controversial Budget.
So who’s for and against Labour’s inaugural, and controversial Budget? Retail Gazette has compiled the voices of support and dissent from retail’s top brass so far.
Against
AO World
The boss of the white goods specialist John Roberts slammed Labour’s Budget. Speaking to The Sun, Roberts says: “Trust them? I would be worried about trusting them to go out for half-a-dozen eggs.
“They weren’t talking of raising taxes when they were trying to get elected — and then suddenly everything changed.”
AO anticipated that Labour’s hike in National Insurance contributions from employers would result in £8m in costs for the retailer – which Roberts said would inevitability lead to inflation.
“If you dramatically increase all the costs then prices will go up, as night follows day. They have to,” Roberts added.
The Entertainer
The Entertainer chief executive Andrew Murphy said the cost increases associated with changes announced in the Budget has “changed what we feel about our opportunities for growth and the viability of our own estate”.
While he has no plans for job cuts or store closures, Murphy told Retail Gazette that the toy retailer’s expansion plans are now being reviewed.
“We had at least six lined up for next year, arguably we could have got as far as 10. I don’t think there are 10 viable locations now because of the cost difference,” he explained.
“It’s not a straightforward answer, but I think the budget has reduced by at least half the number of viable locations that we would consider looking at.”
Frasers
Frasers chief executive Michael Murray described Labour’s budget as “a punch in the face” that will be “devastating” for retailers.
Speaking to The Telegraph, Murray said: “Not only are they going to add an additional minimum of £50m of our costs next year, but consumer confidence has also been destroyed, so it really has been like a punch in the face.”
HMV
HMV owner Doug Putman said the music chain had suspended its store expansion for next year following the Budget.
Speaking to The Telegraph, he said: “The cost to [open new stores] now and the risk that you take for every store has just become that much greater, so that in a lot of cases it’s not worth the risk.”
Putman told The Guardian separately that he would be “surprised” if HMV found a way to get through next year without cutting jobs following the increase in employers’ national insurance contributions.
John Lewis
John Lewis Partnership boss Nish Kankiwala blasted the government for making a “two-handed grab” from businesses as it faces “tens of millions” in additional costs from next year.
Speaking to The Financial Times, the chief executive said the government should look at “radical change in business rates” because “that looks like it is going up for us, as is our people costs”.
“If they could delay the national insurance [changes], but also if they could fundamentally bring forward a radical reshaping of business rates, I think it will make a massive difference,” he added.
Liberty
Liberty’s chief executive Adil Mehboob-Khan told The Telegraph retailers were having a “rough ride” under the Labour Government, and that moves to increase employers’ National Insurance contributions and minimum wage hikes were “making us less competitive.”
Mehboob-Khan said: “It’s a bit of a stretch to make a statement that you won’t increase taxes, then you increase a tax that people may not perceive as a tax because it doesn’t hit their compensation directly.”
He added that Labour would have been wiser to focus on “direct taxation rather than stealth taxation”, adding: “It’s a well studied phenomena what happens when you [have stealth taxes] is that it doesn’t impact immediately. It does impact eventually.”
Morrisons
The supermarket chain’s CEO Rami Baitieh has urged Labour to staggers its “avalanche” of Budget business costs.
Speaking to The Sun, Baitieh said: “The National Insurance change adds insult to injury. The problem is that it’s an avalanche of costs that is coming all at once.
“So I have asked them, can we not defer some of it or go step by step, like a doctor would do — raising the dose with seven pills over seven days.”
Sainsbury’s
Sainsbury’s CEO Simon Roberts warned its prices are set to rise after the government’s decision to raise National Insurance Contributions.
The supermarket boss argued that while it would do everything it could to “mitigate the impact,” it just didn’t have “the capacity to absorb this level of unexpected cost inflation”.
He added: “When you think about the £140m in our business, I don’t think you can shy away from the fact that, because of the changes on everyone’s cost base, it is going to beat through into higher inflation.”
Roberts explained its National Insurance costs would increase over 50% year on year, and that it had to “work through the implications of this” with some “some difficult decisions to take as a result”.
For
Iceland
Iceland Foods boss Richard Walker said of the Budget: “This isn’t a time for businesses to wallow… The Government isn’t going to change its mind. It was a tough Budget, but we adapt.”
Speaking to The Telegraph, Walker added: “There’s been a lot of complaining from business. But, actually what matters much more is how the Government invests for the future and looks at long-term solutions, like skills development, industrial strategy, the business rates overhaul. How they spend all the money they are raising is more important.”
Jollyes
Boss of the pet care specialist and Labour voter Joe Wykes has supported Chancellor Rachel Reeves’ Budget. Speaking to The Mirror, Wykes said: “I feel the government has laid down the gauntlet, it is a challenge for us to grow. My intention is to continue to invest on our people, to continue to open stores, and allow my competition to inflate their prices.”
Wykes also slammed other retailers who had said price increases were inevitable.
“I think there is definitely an area of this being used an excuse,” he said.
“What’s interesting is not who puts their prices up, but when they do it. In reality, you get your wage inflation on the 6th of April. Businesses like me, we buy our goods two to three months ahead. In theory, there should be no flow through until July. But I bet you’ll see the opposite, and that’s just blatant profiteering.”
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