Marks & Spencer chief executive Stuart Machin has called on John Healey to undo what he described as the damaging decisions made in Labour’s first two Budgets, arguing that Britain urgently needs a stronger plan for economic growth.
In an unusually outspoken intervention, Mr Machin condemned the party’s earlier financial measures as “disasters” that had left customers, employees and companies deeply disappointed.
Writing for the Daily Mail, he said the Chancellor must rebuild confidence among businesses and “restore hope” by removing barriers to enterprise and returning more money to households.
The criticism from one of Britain’s most prominent retail executives is likely to cause concern in Downing Street, coming less than three weeks before the first Budget of Andy Burnham’s premiership.
Other senior business figures have echoed his concerns, warning that higher taxes and mounting operating costs are making it more expensive to run companies—and ultimately driving up prices for consumers.
Mr Machin, whose company supplies clothing and food to millions of shoppers, singled out the “disastrous” increase in employer National Insurance. He also raised concerns that Angela Rayner’s expanded employment rights could put Saturday jobs at risk.
He also criticised what he called “patently ridiculous” recycling requirements, a £2billion packaging levy and the country’s widely criticised business rates system.
Other business leaders told the Mail that the next Budget should focus on creating jobs, following what they described as Rachel Reeves’ “smash-and-grab raid” on British enterprise.
M&S chief Stuart Machin pictured with then-Chancellor Rachel Reeves and a long-serving member of the retailer’s staff. In a major intervention, Mr Machin described Labour’s previous Budgets as “disasters” and a “crushing disappointment” for shoppers, employees and businesses.
Chancellor of the Exchequer John Healey is due to deliver his Budget on October 28. In his Daily Mail article, Mr Machin said the new Chancellor must rebuild confidence across the business community.
The former Chancellor, who was dismissed by Mr Burnham, announced £75billion in tax increases during just two years at the Treasury. Critics say the measures have placed severe pressure on households and companies while weakening the economy.
City veteran Sir Martin Sorrell said ministers needed to introduce genuine growth measures rather than simply repeat statements about how important economic expansion is.
He also criticised the Prime Minister’s reliance on social media to promote his agenda. “Andy Burnham has said he is going to take the tough decisions and there are plenty of TikTok videos saying he is going to take them,” Sir Martin said. “We will see on October 28 if he does.”
His comments followed similar remarks from former Bank of England chief economist Andy Haldane, who previously advised Mr Burnham. Last month, Mr Haldane said the Government appeared to be running a conventional tax-and-spend socialist administration—albeit one with more effective TikTok videos.
Sir Martin further warned that hostility towards wealth creation was encouraging some of Britain’s richest taxpayers to leave. Research has suggested that billionaires holding a combined £120billion have departed since Labour came to power.
“High taxation discourages people from building businesses in the UK,” he said. Jason Tarry, the boss of John Lewis, meanwhile warned that increasing taxes on large retailers, including department stores and supermarkets, would damage high streets and could lead to more closures.
Mr Tarry called for the Budget to provide a clear guarantee that no high street retailer would be subjected to higher taxes.
The business backlash came days after Jeremy Clarkson, the former Top Gear presenter who now works as a farmer and publican, attacked Labour’s approach to agriculture and entrepreneurship. He asked why anyone would want to launch a company in Britain under current conditions.
Speaking at the Conservative Party conference this week, leader Kemi Badenoch compared the party with the much-loved retailer, telling supporters: “M&S is back in fashion. Great looks at affordable prices.”
Join the discussion
Should UK businesses bear higher taxes and costs, or should government focus more on growth and jobs?
Rachel Reeve during her first budget on October 30 2024. In this budget, Ms Reeves raised the levy from 13.8 per cent to 15 per cent and cut the threshold at which it kicks in from £9,100 to £5,000 – costing business £25billion
The budget in two weeks time will be the first of Andy Burnham’s premiership
‘They have adapted their style for today’s market and people are flooding back, including me as you’ve probably noticed this week.
‘Just like M&S, we must learn from our mistakes, win back trust, and make people feel good about our party again.’
Mr Healey is facing a tough balancing act in his first Budget as Britain is battered on the global bond markets.
The cost of borrowing for the UK Government hit a 28–year high this week and is higher than any other country in the G7 – underlining concern among international investors over Labour’s tax and spending plans.
Bank of England governor Andrew Bailey this week fired off a pre–Budget warning that the Chancellor must balance the books before the bond markets ‘begin to doubt the fiscal trajectory’.
Mr Machin said: ‘I’ve never hidden what I thought of the last two Budgets. They were a disaster. Britain needed a plan for growth and got a pile of new taxes and regulations instead.
‘I know money is tight. I’m not asking the Chancellor to rip up his fiscal rules. But at the very least, he should start unravelling the mistakes of the last two Budgets.’
Mr Machin highlighted the ‘disastrous’ rise in National Insurance contributions paid by business that has driven up the cost of employing staff – leading to job losses and recruitment freezes.
In her first Budget, Ms Reeves raised the levy from 13.8 per cent to 15 per cent and cut the threshold at which it kicks in from £9,100 to £5,000 – costing business £25billion. ‘It hit shops hard, because so many of our jobs are entry–level and part–time, often just a shift or two a week,’ Mr Machin said.
Mr Machin has also highlighted the threat to Saturday jobs posed by Angela Rayner’s new rights for workers
‘It also hit our suppliers, particularly in farming and food manufacturing, and strict regulations meant most of those costs ended up with retailers.
‘These pressures were always going to be felt at the till.’ Pointing to his own start – a Saturday job ‘pushing trolleys’ aged 16 – Mr Machin also warned of the huge damage Labour’s workers’ rights Act could do to employment prospects for the young.
He said the Government must ‘make sure the Employment Rights Act doesn’t ban the Saturday job by treating normal weekend shifts as ‘low hours’ contracts’. Steve Perez, founder of Hooch and VK drinks maker Global Brands, said: ‘Rachel Reeves mounted a smash–and–grab raid on business and we need to see that approach reversed.’
Mr Perez added: ‘If the Government genuinely wants growth, it needs to stop adding costs and start making it easier for businesses to invest, employ and expand.’ Shadow Chancellor Andrew Griffith said ‘businesses and families are continuing the pay the price’ of Labour’s tax hikes.
He added: ‘John Healey must give businesses a break and end the uncertainty by ruling out yet more tax rises in his Budget this month.’
Here are my six ways Healey can get Britain growing again
By Stuart Machin
I’ve never hidden what I thought of the last two Budgets – they were a disaster.
Britain needed a plan for growth and got a pile of new taxes and regulations instead.
At M&S, we were left facing £150million of new costs each year, on top of a tax bill of around half a billion pounds.
Attention is now turning to the next Budget, the first by Chancellor John Healey. I have written to him directly to set out what needs to change, and why it can’t wait.
Last month the Prime Minister promised Britain ‘hope again’. It struck a chord, and you can see why. People want to believe things can get better. But the speech left big questions unanswered, above all what it means for business and the economy in the coming year.
I was glad to hear the Chancellor reference growth 16 times in his conference speech. He said it’s ‘the only long–term answer’. He’s right. Now the Budget must match his words.
Retail has a big part to play. It’s the engine of the everyday economy, employing more than three million people and keeping customers supplied with what they need. But margins are wafer thin. When the Government piles on costs, there is very little room to soak them up.
At M&S, we’re investing over £2billion in the next three years across our stores, supply chain and technology. But every pound that goes on new taxes is a pound we can’t invest. I know money is tight. I’m not asking the Chancellor to rip up his fiscal rules. But at the very least, he should start unravelling the mistakes of the past two Budgets.
So here are six ways John Healey could get Britain growing by taking the handcuffs off business and putting money back in people’s pockets. The first three wouldn’t even cost the Treasury a penny.
Writing for the Daily Mail, Mr Machin has laid out six ways John Healey could get Britain growing by taking the handcuffs off business and putting money back in people’s pockets. The first three wouldn’t even cost the Treasury a penny
First, scrap the upcoming Deposit Return Scheme – it’s patently ridiculous. Next October, you’ll pay 20p more for every bottle or can of drink. To get it back, you’ll have to lug bags of empties back to the shops – despite already paying your council for collections.
And stores need to rip out shelves to make space for monstrous recycling machines. Retailers are spending tens of millions just to set it up, and will pay millions more every year to run the scheme.
Second, make sure the Employment Rights Act doesn’t ban the Saturday job by treating normal weekend shifts as ‘low hours’ contracts. The Chancellor spoke recently about his first job, washing pots in a pub.
Mine was pushing trolleys at 16. With nearly a million young people out of work or training, don’t let the small print pull up the ladder.
Third, get a food and drink deal with the EU over the line. It’s common sense. Cut the red tape with our nearest neighbours, so the European food we love costs less to bring in, and our brilliant British farmers can sell more abroad. Every month it’s delayed, farmers and shoppers pay the price.
Fourth, undo the most damaging part of the disastrous rise in National Insurance: The cut to the threshold where employers start paying. It hit shops hard, because so many of our jobs are entry–level and part–time, often just a shift or two a week.
It also hit our suppliers, particularly in farming and food manufacturing, and strict regulations meant most of those costs ended up with retailers. These pressures were always going to be felt at the till.
Fifth, fix business rates. Retail makes up around 5 per cent of the economy but pays more than a fifth of all business rates.
That’s not sustainable. M&S alone pays around £170million a year. It’s right to support the pubs, bars and music venues on high streets that bring our towns to life. But if you do that by taxing supermarkets, you’re paying for a cheaper pint by loading costs on to the weekly shop.
Sixth, get rid of the packaging tax. Extended Producer Responsibility was sold as an investment in recycling, but it’s nothing of the sort.
It’s a tax of almost £2billion on food and drink, and even the official forecasters at the OBR now treat it as one. In April, M&S had to pay an extra £40million in one go. Scrap it, and shoppers will feel the difference.
The past two Budgets were a crushing disappointment for customers, colleagues and businesses. Now there’s a new Chancellor and a new chance.
The Prime Minister has promised ‘hope again’ and given us ideas for the next Parliament. But the Chancellor needs to restore hope among British businesses, and tell us what he’ll do now.
