Asda boss Stuart Rose calls budget ‘very, very damaging’

One of Britain’s leading businessmen has warned that Rachel Reeves’ “very, very damaging” Budget will drive up prices and damage jobs and wages.

Stuart Rose, the former Marks & Spencer boss who runs Asda, said the Chancellor’s tax raid on employers will cost £100m next year.

He said the supermarket would “try hard” to mitigate the higher costs so consumers can get competitive prices. But he warned: “We can’t just pull it out of a magic money tree. So we have to look carefully at our planning, and ultimately there will probably be some increases in inflation at some point.”

Rose added: ‘It will, I fear, limit the ability for us to continue to pay our staff, and we have seen an increase in the national minimum wage, so we will have to look very hard this year.’

In her first budget last week, Reeves increased the national insurance rate paid by employers on staff wages from 13.8 per cent to 15 per cent and lowered the threshold at which companies must pay this from £9,100 to £5,000 a year. Rose called this “a very, very damaging additional tax on business.”

The increase in national insurance for employers, which the Treasury hopes will raise £25 billion a year, appeared to contradict Labour’s pledge not to increase taxes. The Chancellor also announced an inflation-busting increase in the minimum wage, on top of a new workers’ rights package that will cost businesses £5 billion a year.

Rose’s views echo similar comments from the directors of M&S, Sainsbury’s, Morrisons and Primark this week – underscoring the level of anger among business leaders over the budget.

Sainsbury’s said it will face additional costs of £140 million next year, while M&S estimates the bill at £120 million and Morrisons at £75 million. Primark cited ‘several tens of millions’ of additional costs.

Outsourcing giant Serco, a leading government contractor, said yesterday that the national insurance increase will add £20 million to costs.

The prospect of higher prices – as well as lower wages and fewer jobs – makes a mockery of Labour’s pledge to ‘protect working people’ before the Budget, a spokesman said.

Rose has been in charge of Asda’s day-to-day operations since September, as the grocer faces a difficult turnaround. The supermarket said sales fell 4.8 percent in the three months to September 30 compared to the same period last year. It said it had invested an additional £30 million to get more staff into the workplace ahead of the critical Christmas period.

Asda also cut 475 jobs at its head office this week and promised to install a CEO ‘in the next financial year’. He has been hunting one specimen for more than three years. Rose said bosses were looking for a ‘warm, breathable, seasoned retailer who works seven days a week and understands our industry’.

Asda has been reeling since the Issa brothers, Mohsin and Zuber, joined private equity giant TDR Capital to buy it in 2021 in a £6.8 billion debt-financed deal.