M&S chair: Tax and employment costs holding back Britain
Rising taxes and employment costs are holding businesses back from investing in Britain and helping it “prosper,” an M&S boss has said.
Archie Norman, chairman of the retail giant and former chief executive of Asda, told shareholders on Tuesday that these “big regulatory headwinds” are “not making it easier to invest and prosper in Britain”.
Speaking at the FTSE 100 firm’s annual general meeting he said: “We’re in an era where macro events, governmental events, regulatory events, tax events have never been more impactful.”
But asked about his view on Prime Minister-to-be Andy Burnham, Norman said: “You can spend an enormous amount of time worrying about what the government might or might not do next, but in the end, what makes a difference for us is what we do in our business.
“My view is [that] you have to fight your corner with [the] government, but focus really on the business, the product [and] the customers.”
In recent months, leading retail figures have ramped up their criticism of Labour’s decision to hike employers’ national insurance contributions (NICs) and minimum wage rates, and to clamp down on flexible working.
Labour under fire over employment costs
In May, Next chairman Lord Simon Wolfson called on the government to ditch its crackdown on zero-hour contracts, which he said will make it “much harder” for retailers to offer more hours to staff.
The boss of electrical retailer AO World accused Labour of living in “an economic fantasy land” last month after revealing his firm has moved the majority of its sales jobs overseas to dodge high employment costs.
Stuart Machin, M&S’ chief executive, told shareholders on Tuesday that the retailer was hit by £150m in extra taxes this year.
This included the Extended Producer Responsibility (EPR) levy on non-renewable packaging, which Machin said cost his company £14m last year and was a “massive dent in [the] profitability” of its food arm.
The retailer’s board faced questions over its failure to pay the “real” living wage to staff this year – a rate which campaigners say meets the cost of food, utilities and rent.
Machin said recent tax hikes are holding back the company’s ability to hike staff pay, telling shareholders: “In retail our actual hourly pay is amongst the best in the retail industry, has been in the last three years, but we have got to balance our costs.”
Retailer recovers from cyber attack
M&S was hit by a cyber attack in April last year which shut down its website for 12 weeks and left some shelves empty.
Chairman Archie Norman described the incident as “traumatic” and the firm revealed in May that it chose to slash bonuses for every single member of staff in a bid to shore up its finances.
M&S saw its profit slump by 29 per cent to £365m in the year to March despite growing revenue, as it took a £131m hit from the incident.
The retailer has looked to its M&S Food arm to drive its recovery, with sales in this arm of the business jumping by seven per cent to £9.7bn in the period.
M&S shares were flat on Tuesday at 382p and have gained 16 per cent in the year to date.