Thursday, November 14, 2024

Corporate Britain must pin the blame for price rises squarely on Rachel Reeves

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BT’s boss Allison Kirkby said the company was facing payments of an extra £100m a year and while it would look for savings elsewhere, price rises might well prove inevitable. Even your local ’Spoons won’t be as cheap as it used to be. “All hospitality businesses, we believe, plan to increase prices,” admitted chairman Tim Martin.

We can expect a whole series of price warnings over the next few weeks as company after company announces its results. At this rate, it won’t be long before the Greggs sausage roll breaks the £2 barrier. Prices are going up fast, and the momentum behind that now looks unstoppable.

Of course, it is easy to understand why it is happening. In her Budget last month, Ms Reeves imposed a steep rise in the employer’s rate of National Insurance taking an extra £24bn directly out of companies. The minimum wage was increased by another 6.7pc, well ahead of the rate of inflation.

And a blizzard of new labour laws are about to push up the non-salary costs of anyone who is on the payroll. You can argue about whether those decisions were justified or not. But there is no denying one very simple point. It is going to add significantly to the costs of business, and the more people they employ the more expensive it will prove.

Most companies are already operating as efficiently as they can – unlike the public sector, of course – and will have no choice but to pass that on in higher prices for their customers, lower wages for their staff, and reduced dividends for their shareholders. Chief executives are simply being honest by pointing that out.

On most political issues, companies opt for a quiet life, and that is perfectly understandable. It is never wise to make an enemy of the Government, and no one listens to them anyway. Typically it achieves nothing.

And yet, this time is different. The public has fallen for the lie that corporate taxes don’t impact them. And so long as that is true, this Labour government will simply raid them again and again.

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