Asda’s chairman Allan Leighton has delivered a sharp warning to Chancellor Rachel Reeves, accusing her of “taxing everything” and urging the government to focus instead on investment to drive growth.
Speaking as speculation grows that Reeves will need to raise an additional £50 billion in her Autumn Budget to balance the books, Leighton said the government’s fiscal approach was already hitting retailers, pushing up inflation and leaving consumers worse off.
“There’s no doubt all of this is hitting the pocket of the consumer,” he told reporters. “And when that happens, that’s not particularly good for anybody. I think there’s more gloom than we’ve seen for a long time.
The comments come as retailers continue to grapple with rising costs following last year’s £40 billion package of tax rises. According to the British Retail Consortium, annual costs for the sector have jumped by £7 billion, driven by increases in employer national insurance contributions, higher minimum wages and new packaging taxes.
Asda, alongside Tesco, Sainsbury’s, John Lewis and other major retailers, wrote to Reeves last week warning that they could not absorb further hikes. They said higher bills would inevitably feed through to shoppers in the form of rising prices, threatening living standards and investment.
Leighton said: “Growth isn’t driven by government. Growth is driven by organisations and companies and people. And if they can’t invest, then we will not grow, no matter what the government says or does.”
Reeves faces mounting pressure over where to find new revenue, with Labour’s fiscal rules preventing her from borrowing more and a manifesto pledge ruling out increases to income tax, VAT and national insurance rates. Options reportedly under consideration include a mansion tax on expensive homes, higher business rates for large stores, and levies on banks and the gambling sector.
Retail leaders say such moves would be “very unhelpful” at a time when food inflation is climbing again – up to 4.9 per cent in July, with the BRC forecasting it could reach 6 per cent later this year.
Economists have warned that without drastic spending restraint or more investment, Britain risks repeating the 1976 financial crisis, when the UK was forced into an International Monetary Fund bailout.
The government’s position is politically sensitive, not least because Leighton himself previously chaired the Co-op Group, which sponsors dozens of Labour MPs. His criticism underscores the unease among business leaders at Labour’s economic direction just a year into office.
Meanwhile, new figures from the Office for National Statistics show that poorer households are now experiencing higher inflation than wealthier ones – 4.1 per cent versus 3.8 per cent – undermining Labour’s claim that its policies shield those on lower incomes.
With unemployment rising and growth slowing, Reeves must juggle the demands of fiscal credibility with growing discontent from businesses and consumers alike.
For Leighton, the message is clear: “Stop taxing everything, and start investing in Britain.”
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Asda boss tells Rachel Reeves to stop ‘taxing everything’ and start investing in Britain