Retail bosses warn Healey that tax rises on shops will push up prices

Retail bosses were set to warn John Healey at a Downing Street summit yesterday that further tax rises on shops would push up prices and cut jobs, two weeks before the Chancellor delivers his first Budget on 28 October.

Executives from Tesco, Sainsbury’s, Amazon, Co-op and Marks & Spencer were among those due at the pre-Budget breakfast meeting. According to The Telegraph, they were expected to tell Mr Healey that business rates, employment taxes and high energy costs were driving up inflation and hitting employment.

Helen Dickinson, chief executive of the British Retail Consortium (BRC), wrote in The Telegraph ahead of the meeting that shops “cannot afford more bad decisions”.

“We will warn Healey that retailers cannot absorb endless costs, which means ordinary shoppers shoulder the burden,” she said. “Families pay more for their weekly shop. Parents pay more for back-to-school clothing. Students pay more for a phone or laptop.

“It’s jobs, too. Retail employment is at its lowest level on record. Job losses do not just hurt retailers. They mean fewer opportunities for people to enter the workplace, less money earned and spent locally and less growth for communities.”

Ms Dickinson, who was due to attend the summit, added: “Lazy thinking over the last two years has led to higher prices and fewer jobs. This will only get worse if government continues to treat retailers as a purse to be raided.”

Labour has introduced a series of tax increases since taking office in 2024, including a £25bn rise in employers’ National Insurance contributions, which The Telegraph reported has been blamed for falls in the number of jobs in retail, wholesale and hospitality.

The Institute for Fiscal Studies said in its Green Budget published on Monday that the Chancellor will need to find £35bn in tax rises or spending cuts to meet all of the Government’s commitments.

Jason Tarry, chairman of John Lewis and Waitrose, wrote in The Telegraph at the weekend that a tax increase on warehouses would trigger a wave of closures. He said the mooted policy would “only harm our high streets”. Mr Healey has since ruled out an increase in business rates for warehouses.

Andy Burnham had said in July that he would fund business rates cuts for pubs and high street firms through higher levies on the distribution warehouses run by online retailers. Mr Healey has also been reported to be considering raising the small business rates relief threshold at the Budget.

Figures from the BRC published yesterday showed retail sales grew by 1.3 per cent in September. The BRC said the public were “still cautious with their spending ahead of expected rises in household bills and taxes”.

HMV said on Monday that it would close its flagship Oxford Street shop three years after reopening it, saying the site had become “commercially unsustainable”. Zavvi, the online music and collectables retailer, has separately fallen into administration.

Executives were also expected to press the Chancellor to remove levies from energy bills and to close the loophole that allows online Chinese retailers to sell goods into the UK without paying the customs duties charged to British businesses.

UKHospitality, which was also due at the meeting, was expected to urge the Government to use Brexit freedoms to cut the sector’s VAT rate to 10 per cent. Proposed changes to the system that classifies foods as healthy or unhealthy were also likely to be discussed.

Tina McKenzie, national chairman of the Federation of Small Businesses, said: “Ministers say they want growth, but growth does not happen by squeezing margins, making employment more expensive and putting barriers in the way of expansion.”

Andrew Griffith, the shadow chancellor, said: “Healey should use the meeting to take his boot off the neck of the retail and hospitality sectors. Number one should be shelving Labour’s anti-employment laws, followed closely by business rates relief.”

Robert Jenrick, of Reform UK, said an increase in the VAT threshold, a reversal on National Insurance contributions and an end to the Employment Rights Act would help the economy. “Small business owners need a government that stops punishing them for employing people and keeping their doors open,” he said.

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