M&S Chief criticises “illiterate” policies in 2024’s spring budget

Marks & Spencer (M&S) CEO Stuart Machin took to social media to express his concerns about the current state of the retail sector in the UK, urging the government to adopt policies that better support and understand the retail industry’s struggles.

Machin’s call to action came two days ahead of yesterday’s Spring Budget – and in it, he primarily criticises the existing business rates system and the recent removal of the tax-free shopping scheme for overseas visitors – both of which he believes hinder the sector’s ability to thrive.

What does Machin say?

In his Linkedin post, Machin argues that the current business rates system is unfair and hinders growth, particularly in the current economic climate. He criticises the planned tax rise for April 1st, stating that “increasing rates at a time when the government is looking to tackle inflation, retailers are working hard to offer customers the very best value and people are struggling with the cost of living is economically illiterate.”

Machin continues to highlight the “broken” nature of the business rates system, which he claims makes “being an employer of people and running stores really hard.” 

Machin’s concerns are echoed by other industry leaders. The British Retail Consortium (BRC), along with other retail associations, have written to the Chancellor requesting a revision of the planned business rates rise. They argue that the current increase, based on November’s Consumer Price Index (CPI), is too high and should be aligned with the lower April CPI.

The Spring Budget 2024

While the budget included measures impacting various sectors, Machin’s specific concerns regarding the business rates system and the tax-free shopping scheme for overseas visitors were not directly addressed.

Business rates

Small and medium-sized enterprises (SMEs), which make up a significant portion of the retail sector, continue to be burdened by the “broken” business rates system, as Machin aptly described it. This system remains unchanged in the budget, meaning retailers will face the same challenges associated with property taxes based on the value of their occupied premises.

Tax-free shopping scheme not reinstated

The reinstating of the tax-free shopping scheme for overseas visitors, which Machin advocated for, was also absent from the budget. This scheme’s removal continues to be a point of contention for the retail sector, potentially hindering its ability to attract international customers.

Further budgetary measures affecting retailers

While not directly addressing Machin’s specific concerns, the budget included a few measures that may indirectly impact retailers:

• National insurance cut: the cut in national insurance contributions from 10% to 8% of pay, effective April 2024, which could potentially offer some relief to retail employees.
• Fuel duty freeze: the continuation of the freeze on fuel duty might benefit delivery costs and transportation expenses for retailers.
• VAT registration threshold increase: raising the VAT registration threshold from £85,000 to £90,000 could provide some administrative and financial relief to smaller retailers.

Conclusion

While the Spring Budget offered some scattered benefits for retailers, it fell short of directly addressing the concerns raised by the wider industry. 

The future of the retail sector hinges on the government’s willingness to listen to industry leaders and implement targeted policies that foster a more supportive and sustainable environment for businesses to operate and thrive. 

Until then, the sector faces an uphill battle in navigating the current economic climate and ensuring its long term success.