Britain’s biggest retailers have warned the Chancellor that jobs will be cut and prices will have to rise as they face a more-than-£7 billion hit from Budget tax increases.
More than 70 businesses, including Tesco, Asda and Sainsbury’s, have told Rachel Reeves in an open letter that the changes announced in last month’s Budget mean price hikes are a “certainty”.
Ms Reeves revealed a £25.7 billion change to employers’ national insurance contributions in the budget, which would increase the rate of the tax and the threshold at which firms must pay.
Businesses have said the raft of Budget policy measures, which also included packaging levies and increases to the national minimum wage, will cost the industry £7.06 billion a year.
The letter, arranged by the British Retail Consortium, was also signed by household names including Amazon, Aldi, Boots, B&Q, Currys, Greggs, JD Sports, Marks & Spencer, Next and Primark.
The letter reads: “We appreciate Government’s focus on improving the fiscal situation and investing in public services; we also recognise the role businesses have in supporting this.
“But the sheer scale of new costs and the speed with which they occur create a cumulative burden that will make job losses inevitable, and higher prices a certainty.”
The group said they would “welcome” the chance to meet Ms Reeves and recommended potential changes including phasing the introduction of the national insurance lower earnings threshold, delaying timelines for packing levy implementations and revisiting business rates proposals announced in the Budget.
“By adjusting the timings of some of these changes, the Government would give businesses time to adjust and greatly mitigate their harmful effects on high streets and consumers,” it read.
It comes after warnings by a number of bosses across the sector in recent weeks.
Sainsbury’s boss Simon Roberts said earlier this month that the tax hikes would mean higher inflation for shoppers, while Asda warned that it would face an extra £100 million in costs thanks to the Budget.
Sentiments were echoed by another joint letter organised by UK Hospitality earlier this month, with some bosses revealing minimum wage jobs could become “unviable” as a result of the new national insurance contributions threshold.
On Saturday, Prime Minister Sir Keir Starmer defended the Budget’s “tough” fiscal decisions amid rising criticism.
Ministers have also come under pressure from farmers and opposition parties to scrap its changes to agricultural inheritance tax, which they warn could hit family farms hard.
The National Farmers’ Union (NFU) is holding a mass lobby of MPs with 1,800 of its members on Tuesday to urge backbenchers to stand up to the Government’s plans to impose inheritance tax on farms worth more than £1 million.