Labor ‘risks destruction of the high street’: Retailers say Reeves’ budget will mean store closures, job losses and higher prices
Lidl’s boss has said the retail sector is ‘teetering’ over the budget, amid warnings it will lead to the ‘destruction’ of the high street.
Lidl GB chief executive Ryan McDonnell said increases to national insurance, wages and business rates will cost the company ‘tens of millions’ of pounds and could push up prices.
The supermarket was one of more than 80 major retailers, including Tesco, Marks & Spencer and Boots, to sign a letter this week warning Chancellor Rachel Reeves that shops will close, jobs will be lost and prices will rise as a result of her action. Budget.
Warning: Lidl GB CEO Ryan McDonnell said increases to national insurance, wages and business rates will cost ‘tens of millions’ of pounds and could drive up prices
The letter warned that the sector is facing a £7 billion hit. And today the boss of the British Independent Retailers Association warns that many businesses are ‘fearful for their survival’.
Andrew Goodacre, whose 4,500 members range from garden centers to department stores, says the Budget has ‘sent shivers throughout the retail and hospitality sectors’.
Writing in the Mail, he warns that Reeves risks ‘causing the destruction of the High Street’ that Labor says it wants to avoid, and calls for proposed business rates rises to be reversed.
He says: ‘The shopping streets cannot tolerate any more.’
His comments come after UK Hospitality – an industry body representing 130,000 venues including bars, restaurants and hotels – said yesterday that the Government must ‘urgently reconsider’ national insurance increases to stem rising inflation and looming job losses .
Last month, Reeves increased the National Insurance rate employers pay 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.
This disproportionately affects retailers, as they employ many people on part-time contracts.
The £25 billion tax raid was accompanied by inflation-busting minimum wage increases, higher business rates and new rights for workers that will cost employers £5 billion a year.
Lidl chief McDonnell said the package of higher costs “poses a challenge” for its 960 UK stores.
“There’s a lot of impact that we’re going to have to negotiate,” he said. ‘The sector is turned upside down. We’re talking £7 billion for the entire sector. For us it will be in the tens of millions.’
Despite the blow, he said Lidl was on course for “our biggest Christmas ever” after winning customers from rivals.
The comments showed Lidl GB’s sales rose 16.9 percent to £10.9 billion last year as the company swung to a profit of £43.6 million after losing £76 million the year before.
- Workers are facing the ax as part of plans by private equity supermarket Morrisons to close its Rathbones bakery in Wakefield, resulting in the loss of 378 jobs.
HMV: They’re tone deaf
Personnel costs: HMV boss Doug Putman
The budget has pitted the government against businesses and employees, the owner of HMV has said.
Doug Putman, the Canadian billionaire behind the vinyl and CD store, has put plans for more stores on hold because it is “no longer worth the risk.”
He hinted at reducing personnel costs and raising prices. “How does that help overall?” said Putman, who owns Toys R Us and saved HMV from administration in 2019.
He said the budget pits workers and businesses against the government. “I think the government is lost, it is tone deaf,” he said.
“If that’s the budget, you’ve missed the point, not just in terms of retail, but also in terms of farmers and so on.
‘I wish we had politicians who were a little more understanding. I don’t think they’ve ever had to run a floor and work in a store.”
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