Tesco faces a £1billion increase in its tax bill over the next four years after Labour’s careless National Insurance hike on British businesses. New analysis shows the supermarket giant will have to fork out more than £250million a year for its 300,000 workers, which will inevitably lead to higher prices for all of us.
The Bank of England has warned Chancellor Rachel Reeves that her tax and spend budget has loaded costs onto businesses which, along with higher energy bills and public sector wage increases, will spike inflation rates again.
Consequently, the modest cut in interest rates this year may well have to be balanced with higher rates next year once NI contributions rise from 13.8% to 15% come April.
It’s not only Tesco that is signalling discontent. All major supermarket chains are facing higher wage bills because of the NI hike and the dramatic rise in the minimum living wage. “It’s going to probably be inflationary,” says Lord Rose, chairman of Asda, adding there “some increases” would be necessary. “This is a very, very damaging piece of extra taxation on business.”
A billion pounds was wiped off the value of shops and pubs listed on the London Stock Exchange last week in the wake of the announcement. Even the usually well performing Greggs dropped by 6% in its latest share valuation.
Socialists have always viewed business in isolation as though it is run by top hat wearing gentlemen with deep pockets who can always afford more. What they don’t appreciate is this money has to come from somewhere and that will probably mean fewer jobs and higher prices for customers.
In fact, it is the “working people” so beloved by Sir Keir Starmer who will feel the impact most heavily.
But bizarrely the people who are supposed to be the experts at the Treasury just don’t care. Darren Jones, deputy to Rachel Reeves, affirmed that big business should just “suck it up” saying they will benefit from “getting the NHS back on its feet.” But we know the NHS is a black hole that needs reform, not yet more money.
In the meantime many shops, hotels and restaurants are facing the hard choice of job cuts or site closures thanks to the tax grab. Over 200 hospitality bosses, including Tim Martin of pub chain JD Wetherpoons, signed a letter to the Chancellor warning of closing venues and slashing jobs.
Unlike the Chancellor they operate in the real world of balancing costs against business viability.
And it’s not only immediate business taxes that is concerning enterprise. Just this week, Sir Keir Starmer at COP29 committed Britain to cutting emissions by an astonishing 81% by 2025. Interestingly he didn’t repeat his pre-election lie that energy bills would be cheaper but just said they would be “stable” – yes, reliably high.
A report last week for the National Energy System Operator said it would take a “Herculean effort” to decarbonise the electricity grid by 2030 and that the promise to cut household bills by £300 per family would not materialise, with the best case scenario being that they remain the same.
And, as always, it is business that faces the brunt of these energy costs.
Recent figures reveal that the UK already has the highest industrial cost of electricity in the world, more than four times the unit price in the US and almost three times more than Germany, which is shutting factories because of high energy bills.
If any of our industries can survive this new energy crunch, they will have to recoup their costs with higher prices. This will add to our inflation and make our goods less competitive abroad. Goodbye to the economic growth that Labour pledged to encourage before the election!
Instead, Labour is settling for looting private business to fill the coffers of the obese public sector. This week it was reported that public sector pay rises are now outstripping those of the private sector, and this is only going to gather pace as Labour bends to its trade union patrons every time they ask for a pay rise.
This is the road to economic disaster and rampant inflation, putting an end to Labour dreams. It was a clever pre-election trick to convince business that Labour was on their side when all they’re interested in is new ways to pick their pockets.
Labour should look across the Atlantic to see what happens to a fat government that ignores the concerns of the people and businesses that pay their taxes. It doesn’t look pretty.
