The chairman of Asda has told Chancellor Rachel Reeves to ‘stop taxing everything’ ahead of the upcoming budget.
Allan Leighton warned the government needs to change the way it thinks about growth in order to avoid a stagnating economy.
He said instead of ‘taxing everything in some way, shape or form’ the government should start investing in Britain.
Ms Reeves must find £50 billion in tax rises or spending cuts to balance the books, the National Institute of Economic and Social Research (NIESR) said.
The Chancellor has vowed to stick to her pledge to not raise income tax, national insurance or VAT – and will also keep her fiscal rules preventing more borrowing.
She is considering extending a freeze on income tax thresholds, introducing a ‘mansion tax’ on the sale of expensive homes and plotting a raid on the gambling industry, The Telegraph reported.
She is also said to be considering hiking business rates for larger units, which could lead to bigger bills for supermarkets.
Mr Leighton said the changes would be ‘very unhelpful’
He added: ‘All these things don’t make life easier. They are contributing to inflation, and inflation is hitting the pocket of the consumer.’
Asda boss Allan Leighton warned the government needs to change its approach in order to achieve economic growth
Rachel Reeves must find £50 billion in tax rises or spending cuts to balance the books
Last week a string of bosses of Britain’s biggest supermarkets and high street chains warned Ms Reeves not to hike taxes on businesses again in her upcoming budget.
They suggested they would not be able to ‘absorb’ a further increase in costs, which could see prices rise for consumers and deliver a fresh hit to Brits’ living standards.
Tesco, Sainsbury’s, John Lewis, Morrisons, Aldi, Lidl, Ikea, Boots, JD Sports, Currys and Kingfisher are among those to have signed a letter to the Chancellor.
They pointed to how Government policies had already ‘added £7billion in new costs to retail businesses’.
This included Ms Reeves’ hike to employers’ National Insurance contributions, an increase in the minimum wage, and the introduction of a new packaging tax.
The retailers, who are part of the British Retail Consortium, warned further tax rises for businesses would leave Labour at risk of breaching its manifesto pledges.
Asda was named this week as the worst performing major supermarket over the three months to August 10.
Sales fell 2.6 per cent to £4.22billion over the period, making it the only grocer to see sales plunge, apart from the Co-op which saw a 3.2 per cent drop.
The bosses of Britain’s biggest supermarkets and high street chains warned Rachel Reeves last week not to hike taxes on businesses again in her upcoming Budget
Its market share has fallen from 12.7 per cent to 11.8 per cent in the past year, market researcher Worldpanel said.
Figures from the supermarket itself also revealed the disposable income of middle-class families had fallen for the first time in two years.
Asda has put pressure on its suppliers to cut their own prices in recent months, in an attempt to win back customers.
Mr Leighton said: We try to do the right thing for the customer and if the suppliers want to come with us, and a lot of them do, then we take that support.
‘But if we think it’s the right thing to do for the customer, we’re going to do it anyway.’
Prior to last year’s general election, Sir Keir Starmer’s party pledged to boost economic growth and families’ living standards.
Official figures published yesterday showed the headline rate of inflation rose by more than expected last month to 3.8 per cent.
This was the highest level since January 2024, while food and drink inflation rose to 4.9 per cent in July from 4.5 per cent in June.
Ms Reeves admitted there was ‘more to do to ease the cost of living’ following the figures.
The British Retail Consortium said Labour policies had ‘driven up the costs of employment’ and were ‘fuelling price rises at the till’.
In their letter to the Chancellor, which was due to be delivered to the Treasury today, the retailers said they had ‘done everything we can to shield our customers from the worst inflationary pressures’
‘But as they persist, it is becoming more and more challenging for us to absorb the cost pressures we face,’ it added.
‘This year Government policy has added £7 billion in new costs to retail businesses, resulting from changes to employer national insurance, higher employment costs, and the introduction of a new packaging tax.
‘Similar increased costs are also starting to flow through our supply chains.
‘Food prices – which had begun to ease – are once again climbing. The British Retail Consortium expects food inflation to hit 6 per cent later this year, driving up household bills just as winter energy costs start to kick in.
‘The impact is further being felt by communities as retail investment falls and 100,000 retail jobs have been lost over the last year alone.
Asda was named this week as the worst performing major supermarket
‘Labour’s manifesto made a clear and welcome promise to deliver good jobs and higher living standards but if future policy decisions lead to rising prices and fewer jobs, then those commitments are at risk.
‘Instead, the retail industry is uniquely placed to help deliver the Government’s central economic mission given our presence in almost every community across the UK.’
Mr Leighton has now called on the government to ‘invest in Britain’ in order to achieve economic growth.
He told CityAM: ‘Growth isn’t driven by government. Growth is driven by organizations and companies and people. And if they can’t invest, then we will not grow, no matter what the government says or does.’
Earlier this year he admitted the supermarket chain is ‘struggling’ and has warned profits will fall further amid an investment to improve stores.
Mr Leighton, who stepped into the role of chairman in November, said it was ‘quite obvious’ that changes needed to be made to improve efficiency.
‘It’s pretty difficult to say the business isn’t struggling when its sales are down five per cent,’ he said.
There are some signs of recovery, even though sales were down 0.2 per cent in the three months to the end of June, it was the supermarket’s best quarterly performance since the start of 2024.
But Asda warned that sales could still take a hit as it races to complete its long-awaited IT upgrade
