The chief executive of Marks & Spencer has urged Chancellor John Healey to reverse key tax increases introduced under Rachel Reeves, warning that Labour’s approach to business has imposed hundreds of millions of pounds in additional costs on retailers and risks undermining Britain’s already fragile growth prospects.
Stuart Machin called on the chancellor to “take the handcuffs off business” and “restore hope” ahead of the Budget on October 28, arguing that the government must correct what he described as a series of “disastrous” decisions that have burdened employers with higher taxes, tighter regulation and greater uncertainty.
His intervention raises the pressure on Healey as he prepares his first Budget as chancellor and the first under Prime Minister Andy Burnham. With public finances constrained and ministers seeking to stimulate investment, the demands from one of Britain’s largest retailers expose the growing tension between Labour’s revenue-raising policies and its promise to revive economic growth.
Writing in the Daily Mail, Machin said the previous two Budgets had failed to deliver the conditions businesses needed to expand.
“I’ve never hidden what I thought of the last two Budgets. They were a disaster. Britain needed a plan for growth and got a pile of new taxes and regulations instead,” he said.
“I know money is tight. I’m not asking the chancellor to rip up his fiscal rules. But at the very least, he should start unravelling the mistakes of the last two Budgets.”
Machin said changes to employers’ national insurance contributions and business rates had added £150mn to M&S’s annual costs, alongside a tax bill of about half a billion pounds.
The company’s complaint centres particularly on the increase in employers’ national insurance contributions introduced by Reeves in 2024. The rate rose from 13.8 per cent to 15 per cent, while the earnings threshold at which employers begin paying the levy was cut from £9,100 to £5,000 a year.
Machin wants Healey to reverse the threshold reduction, arguing that the policy disproportionately affects businesses reliant on part-time, entry-level and lower-paid workers.
“It hit shops hard, because so many of our jobs are entry–level and part–time, often just a shift or two a week,” he said.
“It also hit our suppliers, particularly in farming and food manufacturing, and strict regulations meant most of those costs ended up with retailers.”
The dispute reflects a wider concern among employers that higher payroll taxes are making recruitment more expensive at a time when consumer demand remains under pressure. Retailers face a particular exposure because their workforces include large numbers of part-time staff, while their margins can limit their ability to absorb additional costs.
Where those costs cannot be offset through productivity improvements or lower operating expenses, businesses may seek to pass them on through higher prices, reduce recruitment or reconsider investment. Machin’s argument is that the resulting burden ultimately reaches consumers and workers rather than remaining confined to company balance sheets.
He also urged the Treasury to abandon what he called a “patently ridiculous” deposit return scheme, which is expected to add a 20p charge to bottles and cans, refundable when packaging is returned for recycling.
Machin warned that proposed changes under the Employment Rights Act must also avoid undermining Saturday and other short-hours jobs. He argued that restrictions on low-hours contracts could have unintended consequences for retailers that depend on flexible staffing to cover peak trading periods.
Beyond domestic taxation, the M&S chief called for the government to secure an agreement with the European Union on food and drink, describing a deal as “common sense”. Reducing trade friction could help retailers and suppliers operating across borders, particularly in food, where administrative requirements and delays can complicate supply chains.
The Treasury defended the government’s approach, arguing that long-term growth depends on creating the conditions for businesses to invest, expand and employ more people.
A spokesperson said: “We want Britain’s retailers to thrive, and the chancellor has been clear that the way to tackle cost pressures in the long term is through growth.
“That is why he is focused on creating the conditions for businesses to invest, expand and create jobs in every postcode – and we are already backing firms through business rates cuts, a cap on corporation tax and a £4.3bn package to help businesses manage costs and keep investing.”
The department added that tax decisions would be announced at fiscal events rather than through responses to speculation or individual proposals.
The exchange sets up a difficult test for Healey. Reversing tax increases would reduce the burden on employers but could leave the Treasury needing to identify alternative revenue or spending savings. Maintaining them would protect the government’s fiscal position while risking further confrontation with businesses that argue the cost of employing people has become too high.
Machin insists that the chancellor need not abandon his fiscal rules to change course. His appeal is instead for a Budget that places business investment, employment and growth ahead of further measures that increase operating costs.
Whether Healey accepts that argument will be an early indication of how the Burnham government intends to reconcile its public-finance constraints with its pledge to get Britain growing again.
For retailers, the Budget will determine whether the government offers meaningful relief from the costs they say are constraining hiring and investment — or asks them to absorb another year of pressure while waiting for growth to materialise.
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