Ahead of the Autumn Budget on 26th November, Stuart Machin, the Chief Executive of Marks & Spencer, has urged the Chancellor, Rachel Reeves, to “break out of our economic doom loop of ever higher taxes and lower growth” by backing businesses and not burdening them with higher costs.
In a statement published yesterday, Machin said: “Next month, the Chancellor will be in Parliament to deliver her Budget. Last week I got a small preview, in the slightly more familiar setting of the womenswear section of Pudsey M&S, just outside Leeds.
“Rachel Reeves visited her local store to see first-hand the investment we’re making across M&S. She took time to speak with customers and colleagues, displaying the sort of curiosity and genuine interest that I’ve come to see as characteristic of her approach. And during a huddle with our store team, she made a promise: more of their payslip would end up in their pockets, instead of going on energy bills or rising rents.
“That’s a welcome focus. Because families who shop with us are worried about the Budget. Almost two-thirds believe it will make them worse off, and more than half think they will be taxed more and pay more for goods, with no improvement in public services to show for it.
“As a business leader, I don’t envy politicians. I don’t fully understand their world – just as they don’t really get what it’s like to run a company. But, in simple terms, I think of the PM as Britain’s CEO and the Chancellor as CFO. What they need now is a new plan to break out of our economic doom loop of ever-higher taxes and lower growth.
“Any plan in business weighs up the short and long term. You always want to invest in growth. But you can’t spend what you haven’t got. That’s why M&S reduced our debt over recent years, to unlock investment in our stores and supply chain. Anyone suggesting the Chancellor rip up her fiscal rules is mad – the minute they go, all bets are off. Ministers must prioritise and spend within their means, instead of coming back to businesses or the British public for more. There are clear options for reductions in spending, even if they present political challenges.
“Along the way, any plan can be knocked off course. We’ve had our own bumps at M&S this year. But in politics or business, you can’t make excuses. Things go wrong. Events happen. What matters is getting back on track – not blaming other people or repeating mistakes. We were told last year’s tax rises were a one-off, and I refuse to believe that geopolitics makes that pledge moot. The world economy was volatile then, it is volatile now, and it will be volatile for the foreseeable future.
“I’m biased, but I think retail has a big role to play in the Government’s plan. We’re the engine of the everyday economy – creating jobs, driving high street footfall, and making sure families get affordable and high-quality food, clothes and other essential goods.
“Over the last year, retail has been hit by an alphabet soup of taxes and regulations. New packaging taxes – extended producer responsibility, or EPR – cost M&S almost £40 million a year. The drinks deposit return scheme – DRS – another £30 million to set up. Higher National Insurance Contributions – NICs – have been catastrophic, costing us an extra £60 million and leading to almost 100,000 lost jobs across the economy. And I can’t be the only one who doesn’t understand the Transmission Network Use of System tariff – TNUoS – but it’s sending our energy bills through the roof.
“Retail is now facing £7 billion in additional costs, and our tax bill at M&S has risen to roughly £650 million. Add all this to the impact on farmers in our supply chain from changes to inheritance tax, and you’ve got a recipe for disaster, heaping pressure on the price of the weekly shop for families across the country.
“So what do I hope to see in the Budget? First, no more taxes that hit consumers and the everyday economy. I don’t know what planet Treasury bureaucrats are on when they propose increasing VAT, a regressive tax that would hit working families and stoke inflation.
“Second, action on business rates. Shops need to be exempted from higher charges so they can remain anchors on high streets. Ministers thankfully seem to be moving on this point.
Third, accelerating the EU reset and delivering the agrifood deal that will rip up red tape and reduce cost pressures on the weekly shop. It baffles me that even when all sides have agreed a deal, it still takes Whitehall years to execute.
“Fourth, backing our farmers. They should think again on inheritance tax and introduce a new target to increase the proportion of food eaten in Britain that is produced here, to tilt the planning system in favour of farmers.
“Fifth, getting young people into work. The Jobs Foundation has sensibly proposed national insurance holidays for businesses helping the long-term unemployed into roles. We’ve supported over 12,000 young people into work through our Marks & Start partnership with the Kings Trust – we could do so much more with public investment.
“The Chancellor has two paths ahead of her. More of the same: plugging fiscal holes with tax rises, stoking inflation and suppressing demand. Or change course: spend less, borrow less, tax less, regulate less, reduce inflation and enable growth.”
NAM Implications:
- The M&S CEO has had the courage to spell out two pathways for the government.
- The first, a fiscal gap-filling road to ruin.
- The second, a pragmatist’s recipe that shows a way to success for non-politicians.
- Unfortunately, the government have so far demonstrated little evidence of its ability to deliver practical business solutions…
