The chief executive of Sainsbury’s, Simon Roberts, has urged Chancellor John Healey to avoid imposing further costs on businesses in next week’s Budget, warning that additional taxes or regulations could exacerbate inflationary pressures and increase the cost of employment. Speaking ahead of Mr. Healey’s first fiscal statement, Roberts emphasized the importance of not repeating past budget decisions that have weighed heavily on sectors like retail, one of the most heavily taxed industries in the UK.
Roberts highlighted the impact of recent hikes in national insurance contributions (NICs), which have raised employer costs and contributed to higher food prices. Since the NIC rate on employers rose from 13.8% to 15%, and the threshold for payment was lowered from £9,100 to £5,000, many businesses – particularly those employing part-time workers – have faced increased financial strain. He urged the government to refrain from adding further burdens that could stifle economic growth and inflation reduction efforts.
Last week, Mr. Healey met with representatives from several major retailers, including Sainsbury’s, John Lewis, and Marks & Spencer. The discussions reportedly included assurances that further taxes on warehouses would not be introduced, following concerns raised by retail leaders about potential cost increases. Roberts described the meetings as positive and expressed hope that the government is listening to business needs as policies are developed.
Other business figures have echoed Roberts’ concerns. Andrew Murphy, chief executive of The Entertainer toy retailer, criticized the previous Labour administration’s approach to employer national insurance, describing it as a reversal of earlier promises to support business growth. Murphy called for a rollback of the NIC rises, suggesting such a move would enable companies like his to offer more flexible employment contracts.
The British Chambers of Commerce also urged the Chancellor to reduce employment costs, noting that 71% of firms are currently struggling to recruit staff. Representatives from the hospitality sector similarly called for tax relief and regulatory reforms to foster investment and job creation nationwide. Meanwhile, the City of London Corporation warned that any new taxes on banks could dampen lending to small and medium-sized enterprises, potentially undermining economic expansion despite efforts to support business.
Separately, Sainsbury’s reported mixed trading results for the first half of the year, with total sales excluding fuel rising 2.6% to nearly £14 billion but below analyst expectations. Grocery sales grew 2.2%, slower than forecasted, while clothing and general merchandise sales declined by 2.9%. The company revised upward its expected full-year underlying operating profit to between £1.03 billion and £1.07 billion, from a previous range of £965 million to £1.07 billion.
Roberts noted that although inflationary pressures from global events such as the Iran conflict and an unprecedented European heatwave have not been as severe as initially feared, many households remain under financial stress. He reaffirmed Sainsbury’s commitment to a “food first” strategy, focusing on fresh and premium ranges and enhancing its Nectar loyalty program to remain competitive against discount rivals.
In addition to urging the government to keep employment costs under control, Roberts called for targeted tax relief for farmers to encourage investments in water supply infrastructure. He stressed the importance of enhancing domestic food resilience and production capacity to better withstand global supply challenges.
As the Chancellor prepares to unveil his Budget next Wednesday, businesses across sectors are watching closely, with many skeptical about the likelihood of meaningful relief but hopeful that the government will provide support to help navigate ongoing economic challenges.