Asda boss Stuart Rose calls budget ‘very, very damaging’

A top British businessman has warned that Rachel Reeves’ “very, very damaging” budget will drive up prices and hit jobs and wages.

Stuart Rose, the former Marks & Spencer boss who runs Asda, said the Chancellor’s tax raid on employers would cost him £100m next year.

He said the supermarket will “endeavour” to mitigate higher costs to offer shoppers competitive prices.

But he warned: “We can’t just magically create it from some magic money tree.” “So we have to take a hard look at our planning and at the end of the day there will probably be some inflationary price increases at some point.”

Rose added: “I fear this will limit our ability to continue paying our staff, and we have seen an increase in the national minimum wage, so we will have our work cut out for us this year.”

In his first Budget last week, Reeves increased the National Insurance rate paid by employers on staff salaries from 13.8 per cent to 15 per cent and reduced the threshold at which businesses start paying it from £9,100. at £5,000 a year.

Rose called this “a very, very harmful extra tax on businesses.”

The increase in national insurance for employers, which the Treasury hopes will raise £25bn a year, appeared to contradict Labour’s manifesto not to increase the tax. The Chancellor also announced an increase in the minimum wage to combat inflation, as well as a new workers’ rights package that will cost businesses £5bn a year.

Rose’s views echo similar comments from the bosses of M&S, Sainsbury’s, Morrisons and Primark this week, underlining the level of anger among business leaders over the Budget.

Sainsbury’s said it would face additional costs of £140m next year, while M&S put the bill at £120m and Morrisons at £75m. Primark cited “several tens of millions” of additional costs.

Outsourcing giant Serco, a major government contractor, said yesterday that the national insurance increase will add £20m to its costs.

The prospect of higher prices – as well as lower wages and fewer jobs – makes a mockery of Labour’s promise to “protect workers” ahead of the Budget, a spokesman said.

Rose has been in charge of Asda’s day-to-day running since September, as the grocer faces daunting change. The supermarket said sales fell 4.8 per cent for the three months to September 30 compared to the same period last year. It said it had invested an extra £30m to get more staff into stores ahead of the critical Christmas trading period.

Asda also cut 475 jobs at headquarters this week and promised to appoint a chief executive “in the next financial year”. He’s been looking for one for more than three years. Rose said bosses were looking for a “warm, breathable, wool-dyed, seven-day-a-week retailer who understands our sector”.

Asda has been reeling since the Issa brothers, Mohsin and Zuber, joined private equity giant TDR Capital to buy it in a £6.8bn debt-driven deal in 2021.