Stuart Machin has urged Chancellor Rachel Reeves not to raise taxes on business in next week’s budget.
The M&S chief said he hoped recent “rumours” that Reeves planned to raise National Insurance, as she seeks to plug a £40bn black hole in the country’s finances, were untrue.
Comparing the challenge Reeves faces to his own when appointed M&S CEO in 2022, he said raising taxes would be “a short-term, easy fix” but would make longer-term economic recovery harder.
He argued National Insurance was a “tax on workers”, who would pay through its impact on job opportunities.
“When I was appointed chief executive, my chairman – Archie Norman – told me something I’ll always remember: ‘make decisions for the lifetime of M&S,’” Machin said in an article published on LinkedIn.
“Years of drift had left the company in a precarious position. The easiest thing to do would have been to raise prices, delivering short-term profits to shareholders. But it would have been the wrong thing.
“So I can only imagine the pressure the Chancellor is currently under, as she considers the challenge before her. Economic growth is too low, government debt too high and we’re less productive than our international peers.
“But I keep hearing that the difficult decisions in the upcoming budget are about raising taxes. They’re not. Hiking taxes is a short-term, easy fix. The much harder decisions are around fundamentally re-engineering the British economy, tackling the issues that have held us back for decades.”
Machin said he supported moves in the Employment Rights Bill, such as clamping down on zero-hour contracts. “Yet when I hear about plans to increase National Insurance, a tax with no link to profit, which hits bigger employers like us and our smaller suppliers, I’m concerned,” he said.
“The Chancellor was right in the past to call National Insurance a tax on workers – it makes it more difficult to offer the life-changing opportunity of a job. Particularly if you hike other tax that hit retailers, like business rates or fuel duty.
“Raising these taxes isn’t the hard decision, it’s the easy way out. It might improve the public finances in the short term, but it makes economic recovery harder and hits our customers and colleagues still struggling with the cost of living.”
Machin also questioned the government’s commitment to honouring manifesto pledges on business rates and apprenticeships.
“Labour’s manifesto contained lots of great pledges, but I worry the reality of government is watering them down,” he said. “Bold ambitions to ‘overhaul’ business rates and to give firms flexibility over half of their apprenticeship levy funds must not be missing from the Chancellor’s statement.”
Labour’s manifesto pledges included replacing business rates with a new system to the level the playing field between the high street and online giants. However, Reeves’ warnings of a black hole in public finances have since led to pessimism in retail over the prospect of any meaningful change to the tax burden in her first budget on 30 October.
Machin concluded: “I hope the rumours of the last few weeks are exaggerations. This government was elected to promote a growth agenda, but what I’ve seen and heard so far doesn’t add up to a coherent growth narrative. The budget is a moment to put this right.”
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