Marks & Spencer and John Lewis press for Budget tax relief

Marks & Spencer and John Lewis have urged the government to ease taxes on UK retailers ahead of the Budget, warning that higher property bills could undermine efforts to revive high streets and increase prices for shoppers.

The interventions come less than three weeks before the fiscal statement, as reported by City AM. British Retail Consortium analysis puts retailers’ tax payments at 72p for every pound they make.

What happened

M&S chief executive Stuart Machin and John Lewis Partnership chairman Jason Tarry are pressing Chancellor John Healey to avoid further costs for large retailers. Their demands extend beyond business rates to recycling requirements, employment rules and food trade with the European Union.

A central concern is that the government could finance business rates relief for pubs by increasing charges on warehouses. Retail leaders argue that the higher rate under discussion would also apply to shops, widening its impact beyond distribution operations.

The industry warns that additional property costs would ultimately feed through to consumer prices. Tarry’s intervention challenges the distinction between supporting town-centre businesses and imposing higher charges on the infrastructure and larger stores that serve them.

The background

The government’s high street agenda has focused on tax breaks for pubs and action against gambling shops. Retailers want that programme to recognise the role of major chains in supporting town centres, rather than concentrating relief on particular types of premises.

The BRC ranks retail as the second most heavily taxed sector, behind hospitality. The comparison follows separate findings that hospitality businesses pay 82p in tax for every £1 of profit.

Business taxation is also drawing scrutiny beyond the high street, with Hargreaves Lansdown warning against a rise in capital gains tax. For retailers, the immediate dispute concerns the recurring cost of occupying shops and distribution premises.

The sector’s lobbying comes against a wider backdrop of financial pressure: Weil has reported European retail distress at a post-crisis high.

What people are saying

Writing in the Daily Mail, Machin criticised Labour’s previous two budgets for adding taxes and regulation rather than providing the growth plan he believed businesses needed. He said the Chancellor could begin reversing those decisions without abandoning his fiscal rules.

His specific requests include overturning recycling requirements he considers unreasonable, ensuring employment reforms do not restrict Saturday jobs, and reaching a practical food trade agreement with the EU. He linked restoring business confidence with leaving consumers more money to spend.

Tarry, writing in The Telegraph, set out the potential reach of the higher property charge within his own business. He said it would apply to 18 distribution centres but more than 200 John Lewis and Waitrose stores, leaving the shop estate more widely exposed than the warehouse network.

Tesco chief executive Ken Murphy had raised the same issue earlier in the week. He said he had asked the government to exclude retailers from the highest business rates multiplier and argued that the sector pays, on average, four times its fair share of rates.

What happens next

The Budget is the next decision point for the rates dispute. Retailers are seeking an exemption from the highest multiplier, while Machin wants the Chancellor to start unwinding measures introduced in the previous two budgets.

The scope of any higher charge will determine which premises face increased bills. Tarry’s figures put the treatment of large stores, as well as distribution centres, at the centre of that decision.