M&S CEO: “The Budget needs to back business, not burden it”

Stuart Machin, chief executive of Marks and Spencer (M&S), is calling on the government to “back business, not burden it” ahead of the Autumn Budget on November 26.

In an open letter published by the British retailer, Machin urges chancellor Rachel Reeves not to add any more taxes that “hit consumers and the everyday economy,” to reassess business rates by making shops exempt from “higher charges”, and to "accelerate the EU reset” to reduce cost pressures on the weekly shop.

Machin’s comments follow Reeves visiting Pudsey M&S, just outside Leeds, last week, where she made a promise to shop workers and customers that more of their pay would “end up in their pockets,” which he said was a “welcome focus” as almost two thirds of M&S shoppers said they believe the upcoming budget would “make them worse off,” and more than half think “they will be taxed more and pay more for goods, with no improvement in public services to show for it”.

In a statement, Machin said: “As a business leader, I don’t envy politicians. I don’t fully understand their world – just as they don’t really get what it’s like to run a company. But, in simple terms, I think of the PM as Britain’s CEO and the Chancellor as CFO. What they need now is a new plan to break out of our economic doom loop of ever higher taxes and lower growth.

“Any plan in business weighs up the short and long term. You always want to invest in growth. But you can’t spend what you haven’t got. That’s why M&S reduced our debt over recent years, to unlock investment in our stores and supply chain. Anyone suggesting the Chancellor rip up her fiscal rules is mad – the minute they go, all bets are off. Ministers must prioritise and spend within their means, instead of coming back to businesses or the British public for more. There are clear options for reductions in spending, even if they present political challenges.

“Along the way, any plan can be knocked off course. We’ve had our own bumps at M&S this year. But in politics or business, you can’t make excuses. Things go wrong. Events happen. What matters is getting back on track – not blaming other people or repeating mistakes. We were told last year’s tax rises were a one-off, and I refuse to believe that geopolitics makes that pledge moot. The world economy was volatile then, it is volatile now, and it will be volatile for the foreseeable future.

“I’m biased, but I think retail has a big role to play in the Government’s plan. We’re the engine of the everyday economy – creating jobs, driving high street footfall, and making sure families get affordable and high-quality food, clothes and other essential goods.”

Machin adds that over the last year that retail has been “hit by an alphabet soup of taxes and regulations,” from new packaging taxes, which cost the retailer almost 40 million pounds a year, to a new drinks deposit return scheme, which added another 30 million pounds to set up, and higher National Insurance Contributions that he describes as being “catastrophic,” costing an extra 60 million pounds and leading to almost 100,000 lost jobs across the economy.

“Retail is now facing 7 billion pounds in additional costs,” added Machin, with the M&S tax bill roughly amounting to 650 million pounds.

What would the M&S CEO like to see in the upcoming budget?

Machin adds: “First, no more taxes that hit consumers and the everyday economy. I don’t know what planet Treasury bureaucrats are on when they propose increasing VAT, a regressive tax that would hit working families and stoke inflation.

“Second, action on business rates. Shops need to be exempted from higher charges so they can remain anchors on high streets. Ministers thankfully seem to be moving on this point.

“Third, accelerating the EU reset and delivering the agrifood deal that will rip up red tape and reduce costs pressures on the weekly shop. It baffles me that even when all sides have agreed a deal, it still takes Whitehall years to execute.

“Fourth, backing our farmers. They should think again on inheritance tax and introduce a new target to increase the proportion of food eaten in Britain that is produced here, to tilt the planning system in favour of farmers.

“Fifth, getting young people into work. The Jobs Foundation has sensibly proposed national insurance holidays for businesses helping the long-term unemployed into roles. We’ve supported over 12,000 young people into work through our Marks & Start partnership with the Kings Trust – we could do so much more with public investment.”

Machin’s appeal to Reeves

“The Chancellor has two paths ahead of her,” added Machin. “More of the same: plugging fiscal holes with tax rises, stoking inflation and suppressing demand. Or change course: spend less, borrow less, tax less, regulate less, reduce inflation and enable growth.”

Machin’s message follows warnings from the British Retail Consortium, which stressed last week that retail spending has slowed as the budget looms large, and it is affecting shoppers preparing for Christmas shopping, a vital time for retail, as well as retailers looking to invest and hire additional staff.

Helen Dickinson, Chief Executive of the British Retail Consortium, said: “Rising inflation and a potentially taxing Budget is weighing on the minds of many households planning their Christmas spending. Retailers also face difficult decisions about investment and hiring over the Golden Quarter, given uncertainty over business rates bills arriving in April.

“The future of many large anchor stores and thousands of jobs remains in jeopardy while the Treasury keeps the risk of a new business rates surtax on the table. By exempting these shops when the Budget announcements are made, the Chancellor can reduce the inflationary pressures hammering businesses and households alike.”