Asda boss Stuart Rose brands the Budget ‘very, very damaging’

One of Britain’s leading businessmen has warned that Rachel Reeves’s ‘very, very damaging’ Budget will push up prices and hit jobs and pay.

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

He said the supermarket would ‘try hard’ to mitigate the higher costs in order to offer shoppers competitive prices. But he warned: ‘We can’t just magic it up from some magic money tree. So we have to look hard at our planning, and at the end of the day, there’ll probably be a bit of inflationary price increases going through at some point.’

Rose added: ‘It will curb, I’m afraid, the ability for us to keep paying our staff, and we have seen an increase in the national minimum wage, so we’ll have to look very hard this year.’ 

In her first Budget last week, Reeves raised the national insurance rate paid by employers on staff wages from 13.8 per cent to 15 per cent and cut the threshold at which firms start paying it from £9,100 to £5,000 a year. Rose called this ‘a very, very damaging piece of extra taxation on business’.

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

Rose’s views echo similar remarks from the heads of M&S, Sainsbury’s, Morrisons and Primark this week – underlining the level of anger among business leaders over the Budget.

Sainsbury’s said it faced extra costs of £140m next year while M&S put the bill at £120m and Morrisons £75m. Primark cited ‘several tens of millions’ of extra costs.

Outsourcing giant Serco, a leading government contractor, yesterday said the national insurance hike will add £20m to its costs.

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

Rose has been in charge of the day-to-day running of Asda since September, as the grocer faces a daunting turnaround. The supermarket said sales slumped 4.8 per cent for the three months to September 30 compared to the same period last year. It said it had invested an extra £30m into getting more staff on shop floors ahead of the critical Christmas trading period.

Asda also axed 475 head office jobs this week and vowed to install a chief executive ‘in the next financial year’. It has been hunting for one for more than three years. Rose said bosses were looking for a ‘warm, breathing, dyed in the wool, seven-day-a-week retailer who understands our sector’.

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

DIY INVESTING PLATFORMS

AJ Bell

AJ Bell

Easy investing and ready-made portfolios

Hargreaves Lansdown

Hargreaves Lansdown

Free fund dealing and investment ideas

interactive investor

interactive investor

Flat-fee investing from £4.99 per month

Saxo

Saxo

Get £200 back in trading fees

Trading 212

Trading 212

Free dealing and no account fee

Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.

Compare the best investing account for you