There are fears supermarket prices could rise as Tesco faces an extra £1 billion tax bill thanks to Rachel Reeves’ National Insurance raid on businesses.
According to an analysis by Morgan Stanley, the supermarket will have to pay £250 million more over the next five years under a Labor government.
Tesco, which is expected to make £2.9 billion in operating profits this year, did not dispute the figure when put to them by The Sunday times.
The Sainsbury’s, Asda and Morrisons bill will total £1.3 billion over the course of this Parliament.
It comes after Ms Reeves’ decision to increase National Insurance for employers to 15 per cent from next spring.
There are fears supermarket prices could rise as Tesco faces an extra £1 billion tax bill thanks to Rachel Reeves’ National Insurance raid on businesses.
It comes after Ms Reeves’ decision to increase National Insurance for employers to 15 per cent from next spring
Sainsbury’s boss Simon Roberts has already said the tax bomb Budget will lead to higher food prices, while Marks and Spencer have warned there are ‘quite significant costs to be incurred’.
More than 200 hospitality bosses have already written to the Chancellor to highlight their “serious fears” about the increase and increase in the national minimum wage, which is estimated to cost the sector an additional £14 billion.
“The changes to the NIC threshold are not only unsustainable for our business, they also have a regressive impact on lower income earners and will impact flexible working practices that many older workers and parents rely on,” they wrote.
“They will undoubtedly lead to business closures and job losses within a year.”
Sainsbury’s has estimated its tax bill will rise by £140 million, M&S says it will rise by £60 million, while Co-op warned tax would rise by ‘tens of millions of pounds a year’.
Meanwhile, Ms Reeves also lowered the level at which businesses must start paying – with Mr Machine labeling the lowered threshold a ‘double whammy’ for businesses.
Sainsbury’s CEO Mr Roberts said there is ‘too much pressure already in the pipeline’ for the retailer to swallow an unexpected cost increase without it impacting prices.
M&S chief executive Stuart Machin (pictured) said the company will do ‘everything we can’ to avoid price rises for shoppers
M&S expects its tax bill to rise by £60 million next year to around £520 million, following the Chancellor’s decision to increase national insurance for employers (stock photo)
He added that the “unexpected barrage of costs” for consumers “will lead to higher levels of inflation.”
Speaking about his concerns to the Telegraph, Stuart Machin, chief executive of M&S, said: ‘We had planned an increase because it was clear before the Budget that there would be an increase in National Insurance for businesses.’
To make matters worse, retailers have seen high levels of shoplifting, with shoplifting at M&S rising to its highest ever level last year.
M&S chairman Archie Norman previously told LBC News that stores across the country are receiving ‘very little help’ from police, even as retail theft rates have soared.
According to the Office for National Statistics, a total of 430,104 offenses were recorded by police in the year to December 2023, an increase of more than a third (37%) compared to 315,040 in the previous twelve months.
Mr Norman’s comments echoed those of other retail bosses who accused ministers of allowing shoplifting to be effectively decriminalised, with many police forces failing to attend to the majority of reports or collect any evidence if they did.
Figures from this year show that less than 40 per cent of shoplifting reports between April 2022 and April 2023 were attended by the Metropolitan Police.
Speaking to LBC’s Nick Ferrari about the issue, Mr Norman said: ‘I think shoplifting is a problem. I think I’ve said it before, but it’s a global problem stemming from the pandemic. It’s happened everywhere.
In the year to December 2023, police recorded a total of 430,104 shoplifting incidents. This figure is the highest since current records began in the year to March 2003.
“We get very little help from the police and we have to accept that the police are no longer interested in these types of crimes.”
Despite the worrying statistics, Mr Norman said thefts at M&S are actually declining ‘largely’ thanks to the retailer’s own efforts and not the police.
The High Street stalwart has pumped money into crime prevention measures such as shop detectives and CCTV systems.
Small businesses said this month that the Autumn Budget is ‘the final nail in the coffin’ as they continue to deal with its impact.
Bosses said they will be forced to cut services, lay off staff or even close as a result of Labour’s tax bomb.
They are particularly angry about a £25 billion increase in employers’ national insurance contributions, while others fear the impact of a 6.7 per cent rise in the minimum wage to £12.21 an hour.