UK Chancellor Faces Retailer Pushback on Tax Hikes Ahead of Budget
Retail and hospitality leaders are set to meet with the Chancellor, urging him to avoid further tax increases that they argue are harming businesses and driving up prices.
Chancellor John Healey is scheduled to host a delegation of retail and hospitality executives at Downing Street on Tuesday. The meeting comes as Healey faces significant pressure to refrain from imposing additional tax hikes and business costs in his upcoming Budget, which is slated for release in 17 days. Business leaders argue that existing burdens have already contributed to rising prices.
Stuart Machin, CEO of Marks & Spencer, has been a vocal critic, calling on the Chancellor to "get Britain growing again by taking the handcuffs off business." Machin described Labour's previous two Budgets as "a disaster" for piling on taxes and regulations rather than fostering growth. He urged Healey to reverse these measures, acknowledging fiscal constraints but advocating for a dismantling of past budgetary mistakes.
Jason Tarry, chairman of John Lewis and Waitrose, echoed these concerns, warning that a tax on department stores and supermarkets could lead to store closures and negatively impact high streets. Retailers are particularly apprehensive that a proposed tax on warehouse space, intended to fund business rate cuts for pubs, clubs, and music venues, could disproportionately affect supermarkets.
"You're paying for a cheaper pint by loading costs on to the weekly shop," Machin stated. The Daily Mail reported his intervention, in which he urged Healey to "restore hope" and acknowledged the "crushing disappointment" of previous budgets for consumers, employees, and businesses.
British firms currently face the highest property tax burden among major economies, according to a report by tax consultants Ryan. Labour introduced a higher rate surcharge on large warehouses, a measure intended to target online retailers but which also impacts physical retailers with extensive distribution networks, such as Tesco.
Reports suggest that Healey now recognizes the potential negative impact of a warehouse tax on high street shops and family-owned businesses. The Chancellor is navigating a difficult fiscal landscape, with Britain's borrowing costs reaching a 28-year high, reducing his available financial buffer to approximately £12 billion.
It remains unclear which retail leaders will attend the Downing Street meeting. Representatives from Sainsbury's indicated they had not received an invitation, while Asda's CEO, Allan Leighton, will be absent due to a prior commitment.
A spokesperson for HM Treasury stated that they do not comment on "rumour, speculation or proposals." The statement emphasized a desire for UK retailers to thrive and highlighted the Chancellor's focus on fostering growth conditions for businesses to invest, expand, and create jobs. The Treasury also pointed to existing support measures, including business rate reductions, a cap on corporation tax, and a £4.3 billion package to help businesses manage costs and maintain investment.