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 faces increased employment costs and higher business rates following the Budget, which could hinder the retailer’s turnaround efforts. “That seems to be sort of [a] two-handed grab, and that’s unhelpful,” he told the Financial Times.
The partnership, which operates John Lewis department stores and Waitrose supermarkets, anticipates spending tens of millions of pounds extra on staff costs after the Chancellor announced an increase in the employers’ National Insurance rate. In the Budget, Ms. Reeves stated that employers’ National Insurance contributions would rise from 13.8% to 15% in April, while also lowering the threshold at which contributions are paid.
Additionally, the Treasury has delayed a planned overhaul of the business rates system until 2026, despite previous pledges to reform how companies are taxed on their properties to support retailers. This delay means that many retailers, including John Lewis, will face higher business rates bills for at least another year.
Kankiwala commented: “If they could delay the National Insurance [changes], but also if they could fundamentally bring forward a radical reshaping of business rates, I think it will make a massive difference—not just for small and medium enterprises, but I think for retail generally. It’s very important.”
The criticism from John Lewis comes after retailers expressed frustration at being blindsided by the changes, having believed that business rates reform would occur sooner. Simon Roberts, chief executive of Sainsbury’s, recently stated that 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, over 80 chief executives wrote to Ms. Reeves last weekend, warning that the sector faces £7 billion in increased costs, making job losses and price rises inevitable.
Kankiwala said the John Lewis Partnership would attempt to avoid raising prices. “The last thing we need is a resurgence of inflation, because we just got that under control, and inflation is not good for anybody,” he added.
In response, Treasury officials reportedly reached out to retailers last week in an effort to ease concerns after learning that companies were planning a public letter criticizing the Budget decisions. The Prime Minister’s spokesman stated they were not aware of any attempts to discourage businesses from signing a letter, adding: “Obviously you’ve seen vast waves of reaction to the Budget, as you do with all fiscal events, and this is no different.”
The Treasury has defended its decisions, arguing that “difficult choices” were necessary in the Budget. A Treasury spokesperson said earlier this week: “By doing this, more than half of employers will either see a cut or no change in their National Insurance bills. There will be £22.6 billion more for the NHS, and workers’ payslips will be protected from higher tax. This government is committed to delivering economic growth by boosting investment and rebuilding Britain.”