M&S Chief Slams Government Tax Policies, Warns Retail Sector Is Under Siege

In a strong criticism of the current government policies, the chief executive of Marks & Spencer, Stuart Machin, voiced his concerns over new tax measures that he claims are heavily burdening the retail industry. He compared the increasing demands on retailers to a piggy bank being raided, particularly pointing to the higher National Insurance Contributions and a controversial levy on packaging as major obstacles to growth. Machin urged the government to consider easing the immediate financial strain by spreading out these changes and postponing the packaging levy, emphasizing that uncertainty could lead to slower growth and significant repercussions for the sector.

The government’s recent budget announced an increase in NIC rates from April and a reduction in the earnings threshold at which businesses start paying these contributions, lowering it from £9,100 to £5,000. Despite unions applauding the rise in the National Living Wage, many businesses remain deeply worried about the surge in operational costs. This policy adjustment comes amid a broader backdrop of financial pressures on retailers, with warnings of potential job cuts, store closures, and subdued wage growth despite the notable profit reported by M&S.

Adding another layer to the fiscal challenges, the National Audit Office has flagged the British tax system as increasingly convoluted, pointing out that the complexity is costing both HMRC and businesses significantly. The NAO’s findings revealed that HMRC’s expenses soared by an extra £563 million between 2020 and 2024, while businesses collectively incurred £15.4 billion in compliance costs. The report also indicated that further changes to the tax system could escalate administrative expenses by an estimated £875 million in the coming years, stressing the need for a more streamlined approach.

Gareth Davies, the head of the NAO, stressed the importance of creating a tax system that is modern, resilient, and effective so that individuals and businesses can get it right from the start. In response, a Treasury spokesperson defended the government's recent measures by pointing to policies that aim to cap corporation tax and reduce business rates for key sectors like retail, hospitality, and leisure. These adjustments, according to the government, are designed to provide stability and form a robust foundation for future economic growth, despite the immediate financial challenges expressed by industry leaders like Machin.