Nish Kankiwala, chief executive of the John Lewis Partnership, has accused Chancellor Rachel Reeves of implementing a “two-handed” tax grab on retailers, joining a growing backlash against the recent Budget.
Kankiwala stated that John Lewis will face higher labor costs and higher business rates as a result of the budget, which could hamper the retailer’s turnaround efforts. “That seems to be a bit [a] grabbing with both hands, and that makes no sense,” he told the Financial Times.
The partnership, which operates John Lewis department stores and Waitrose supermarkets, expects to spend tens of millions of pounds extra on staff costs after the Chancellor announced an increase in the employer premium rate. In the budget, Ms Reeves said employers’ national insurance contributions would rise from 13.8% to 15% in April, while the threshold at which contributions are paid would also be reduced.
In addition, the Treasury has postponed a planned review of the business rates system until 2026, despite previous commitments to reform the way businesses are taxed on their properties to support retailers. This delay means many retailers, including John Lewis, will face higher business rates for at least another year.
Kankiwala noted: “If they could delay national insurance [changes]But even if they could fundamentally achieve radical reform of business rates, I think it would make a huge difference – not just for SMEs, but I think for retail in general. It is very important.”
John Lewis’ criticism comes after retailers expressed frustration at being blindsided by the changes, believing business rates reforms would happen sooner. Sainsbury’s chief executive Simon Roberts recently said the supermarket supported the government’s employment reforms based on a “clear commitment” from ministers to urgently tackle business rates. “We need business rates reform to rebalance the balance,” he said.
Amid growing tensions between the Treasury and retailers, more than 80 top executives wrote to Ms Reeves last weekend, warning that the sector faces £7 billion in higher costs, making job losses and price rises inevitable.
Kankiwala said the John Lewis Partnership would try not to increase prices. “The last thing we need is a resurgence of inflation, because we just got it under control, and inflation is not good for anyone,” he added.
In response, Treasury Department officials reportedly reached out to retailers last week in an attempt to allay concerns after learning that companies were planning a public letter criticizing the budget decisions. The Prime Minister’s spokesperson stated that they were not aware of any attempts to discourage businesses from signing a letter, adding: “You have clearly seen huge waves of reaction to the Budget, as with all Budget events, and this is no different. ”
The Ministry of Finance has defended its decisions, arguing that “difficult choices” were needed in the budget. A Treasury spokesperson said earlier this week: “By doing this, more than half of employers will see a reduction or no change in their national insurance bills. There will be £22.6 billion more available for the NHS, and workers’ paychecks will be protected from higher taxes. This government is determined to deliver economic growth by boosting investment and rebuilding Britain.”