Key facts
- M&S chairman Archie Norman stated that rising taxes and employment costs are significant headwinds for UK businesses.
- Norman advised businesses to focus on their operations and fight their corner with the government.
- Retail leaders have criticized proposed increases in employers' national insurance contributions and minimum wage rates.
- M&S CEO Stuart Machin reported that the company faced £150 million in additional taxes this year.
- The Extended Producer Responsibility (EPR) levy cost M&S £14 million, impacting its food arm's profitability.
- M&S profit fell 29% to £365 million in the year to March due to a cyber attack and increased taxes.
Archie Norman, chairman of Marks & Spencer, has stated that rising taxes and employment costs are significant obstacles for businesses looking to invest and prosper in the UK. Speaking at the company's annual general meeting, Norman described these as "big regulatory headwinds" that are making it more difficult to operate and grow.
Norman advised businesses to focus on their own operations and customers while actively engaging with the government. He noted that macro-economic, governmental, and regulatory events have never been more impactful on businesses.
Leading retail figures have voiced concerns about potential Labour policies, including hikes in employers' national insurance contributions and minimum wage rates, as well as restrictions on flexible working. Lord Simon Wolfson, chairman of Next, has called for the government to abandon its crackdown on zero-hour contracts, arguing it will make it harder for retailers to offer more hours to staff. The boss of AO World has also criticized Labour's economic approach, stating his company has moved most of its sales jobs overseas to mitigate high employment costs.
M&S Chief Executive Stuart Machin reported that the retailer incurred an additional £150 million in taxes this year. He specifically mentioned the Extended Producer Responsibility (EPR) levy on non-renewable packaging, which cost the company £14 million last year and significantly impacted the profitability of its food division. Machin also addressed questions regarding the company's decision not to pay the "real" living wage, explaining that recent tax increases limit the company's capacity to raise staff pay, despite M&S offering competitive hourly rates within the retail industry.
The company also discussed the impact of a cyber attack in April of the previous year, which disrupted operations for 12 weeks. Norman described the incident as "traumatic." In response to financial pressures from the attack, M&S reduced bonuses for all staff. The cyber attack resulted in a £131 million hit, contributing to a 29% slump in profit to £365 million for the year ending March, despite revenue growth. The M&S Food arm has been a key driver of recovery, with sales rising 7% to £9.7 billion during the period. M&S shares were trading flat at 382p on Tuesday, having gained 16% year-to-date.