Nish Kankiwala, chief executive of the John Lewis Partnership, has accused Chancellor Rachel Reeves of carrying out a “two-handed” tax grab on retailers, as she joined a growing backlash against the latest budget.
Kankiwala said John Lewis faces increased recruitment costs and higher turnover after the Budget, which could hamper the retailer’s turnaround efforts. “This seems like a kind of hand-holding, which is not helpful,” he told the Financial Times.
The partnership, which runs John Lewis department stores and Waitrose supermarkets, expects to spend tens of millions of pounds more on staff costs after the Chancellor announced a rise in the National Insurance rate for employers. Ms Reeves said in the Budget that employers’ National Insurance contributions would rise from 13.8% to 15% in April, with the threshold at which contributions are paid being lowered.
In addition, the Treasury has delayed a planned reform of the business rates system until 2026, despite previous pledges to reform how businesses tax their property to support retailers. The delay means many retailers, including John Lewis, will face higher business rates bills for at least another year.
Kankiwala commented: “If they can delay National Insurance (changes), but also if they can radically reshape business rates, I think that will make a massive difference – not just to SMEs, but I think to retail in general. It’s important.” “Very much.”
John Lewis’s criticism comes after retailers expressed frustration at being shocked by the changes, having thought business rates reform would happen sooner. Recently, Sainsbury’s chief executive Simon Roberts said the supermarket supported the government’s employment reforms based on a “clear commitment” from ministers to urgently address business rates. “We need business rates reform in order to balance the scales,” he said.
Amid growing tension between the Treasury and retailers, more than 80 chief executives wrote to Ms Reeves last weekend, warning that the sector faces a £7bn cost rise, making job losses and higher prices inevitable.
Kankiwala said the John Lewis partnership would try to avoid raising prices. He added: “The last thing we need is inflation to come back, because we have just managed to get that under control, and inflation is not in anyone’s interest.”
In response, Treasury officials reportedly reached out to retailers last week in an attempt to ease concerns after learning that companies were planning a public letter criticizing budget decisions. The Prime Minister’s spokesman said they were not aware of any attempts to discourage businesses from signing the letter, adding: “Clearly you have seen wide waves of reaction to the Budget, as you do with all financial events, and this is no different.”
The Treasury has defended its decisions, arguing that “hard choices” were necessary in the budget. A Treasury spokesman said earlier this week: “By doing this, more than half of employers will either see a reduction or no change in their National Insurance bills. There will be an additional £22.6 billion for the NHS, and “Protecting workers’ payrolls from higher taxes. This government is committed to delivering economic growth by boosting investment and rebuilding Britain.”