Chancellor Rachel Reeves comes under fire from Marks and Spencer boss as he says lowest paid ‘will bear the brunt’ of tax raid_Nhy
Rachel Reeves came in for fresh criticism from the bosses of Marks & Spencer and John Lewis yesterday over her £25 billion business tax raid in the Budget.
M&S chairman Archie Norman said the lowest paid would bear the brunt of the increase to employers’ National Insurance contributions.
His verdict came as the outgoing John Lewis chief executive, Nish Kankiwala, said his business faces paying ‘tens of millions’ in additional NI contributions.
This move – branded a ‘tax on jobs’ that breached Labour‘s manifesto pledge not to raise NI – will come alongside higher business rates from April.
‘That seems to be, you know, sort of [a] two-handed grab, and that’s unhelpful,’ Kankiwala, who oversees the department store chain and Waitrose supermarkets, told the Financial Times.
The retail leaders’ remarks were just the latest setback for the Chancellor as she faces a mounting revolt on the High Street over her Budget.
Last month Ms Reeves raised the NI rate paid by employers on staff wages from 13.8 per cent to 15 per cent, and cut the threshold at which firms start paying it from £9,100 to £5,000.
The £25billion tax raid came alongside inflation-busting increases to the minimum wage, higher business rates and new rights for workers that will cost employers £5 billion a year. The barrage of costs would lead to fewer jobs, Mr Norman warned.
Rachel Reeves (pictured out jogging this morning) came in for fresh criticism from the bosses of Marks & Spencer and John Lewis yesterday over her £25 billion business tax raid in the Budget
M&S chairman Archie Norman (pictured) said the lowest paid would bear the brunt of the increase to employers’ National Insurance contributions
M&S was among more than 80 major stores, including Tesco and Boots, to sign a letter this week warning Ms Reeves that shops will close, jobs will be lost, and prices will go up in a £7billion hit (stock image)
This is because employees previously did not have to pay the tax for staff on low-paid part-time contracts, including shopkeepers and bar staff.
But now firms have to pay for these staff, as well as a higher tax rate.
Mr Norman said: ‘The NI increase will hit the lower paid [the] worst, reducing investment and employment in retail and hospitality.’
M&S was among more than 80 major stores, including Tesco and Boots, to sign a letter this week warning Ms Reeves that shops will close, jobs will be lost, and prices will go up in a £7billion hit.
And Mr Kankiwala called for a delay to the changes, as well as a ‘radical reshaping’ of business rates, property taxes paid on shops.
He warned that a raft of cost increases in one blow could trigger ‘a resurgence of inflation’.
The pub industry also sounded the alarm yesterday, saying beleaguered venues may be unable to continue to hire staff.
Emma McClarkin, chief executive of The British Beer and Pub Association, said: ‘If we’re to keep people in work and put money in their pockets, business needs to be viable.
‘We urge the Government to reconsider the timings of the new employment costs and swiftly deliver meaningful business rate reforms.’
