Retail giants including M&S and Tesco warn PM over budget tax raid

Some of Britain's biggest retailers, including Asda, Marks & Spencer (M&S) and Tesco, have warned Andy Burnham that a renewed budget tax raid could threaten his cost of living campaign as well as the viability of some of their biggest stores across the country.

Sky News has obtained a letter sent to the prime minister by the Retail Jobs Alliance (RJA), a coalition of food and general merchandise chains which collectively employ nearly 1 million people in the UK.

In its letter, which was sent last week, the group said any move to hike the higher business rates multiplier for stores with a rateable value above £500,000 would undermine its members' ability to maintain lower prices for consumers.

"We welcome your commitment to 'growth in every postcode' and support the recent announcement to reduce business rates for pubs, clubs and live music venues, alongside measures to review reliefs for businesses that do not make a positive contribution to local communities," the RJA wrote.

"As further changes to business rates are considered, we believe they should support continued investment by bricks-and-mortar retailers across the country.

"Retail stores are integral to high street renaissance but they cannot continue investing in communities if they face an ever-increasing tax burden."

The RJA's members, which also include B&Q-owner Kingfisher, Morrisons, Primark and Sainsbury's, are said to be anxious that they will be hit financially in next month's budget in order to pay for Mr Burnham's recent rates giveaway to pubs and live music venues.

Significantly, last week's letter was also signed by Usdaw, which has 370,000 members and is the fifth-biggest trade union in Britain as well as being among Labour's biggest financial backers.

The RJA described the high street as "a single ecosystem" which would be weakened if business rates were cut for the hospitality sector while being increased for retailers.

"Retail is the most highly taxed sector relative to its economic output, paying 21% of all business rates despite representing only 5% of GDP," the group told Mr Burnham.

"The autumn budget alone added £7bn in new costs and taxes to the sector last year.

"This additional burden - with business rates a significant element - is a direct cost driver on prices, and further increases would place even greater pressure on retailers' ability to support customers through competitive pricing and cost of living initiatives, while continuing to offer employment opportunities in communities across the country."

The RJA's intervention comes about eight weeks before John Healey, the new chancellor, presents his first budget, with speculation mounting about a fresh tax raid on sectors including banking, oil and gas and retail.

Executives at some of Britain's biggest retailers have become increasingly concerned in recent weeks that Mr Healey will use his fiscal statement to increase the higher business rates multiplier from the existing 50.8p level, which was set by Rachel Reeves last November.

"The previous government's introduction and increases to the higher multiplier have already placed unsustainable pressure on the sector," the RJA said in its letter.

"Approximately 4,000 stores over the £500,000 threshold employ one in three retail workers.

"Any further increases to the multiplier would severely impact investment, employment and the viability of these anchor stores across the country."

The retailers' warning echoes previous lobbying efforts by the industry, including in 2024 when they told Sir Keir Starmer's administration that many of the stores vulnerable to higher business rates were located in areas of significant unemployment.

In its latest letter, the RJA highlighted the former minister Alan Milburn's recent review of youth unemployment, declaring: "Retail remains one of the country's most important pathways into work for young people.

"As the Milburn review examines rising youth unemployment and NEETs, it is vital to protect these routes into employment.

"We recognise the government's 2024 manifesto commitment to level the playing field between the high street and online giants.

"As you seek to rebalance the system, and consider various options, we would urge you to exempt all bricks-and-mortar retail stores from the higher multiplier.

"This would support your commitment to growth in every postcode by safeguarding retail employment across the country, the foundation that makes vibrant high streets and communities possible."

The RJA's revival comes at a delicate time for relations between the major UK grocers - which are some of Britain's biggest private sector employers - and the Labour government.

In May, the Treasury sparked uproar by suggesting to industry executives that they cap the price of everyday food items - an idea that was quickly dropped after being reported by the Financial Times.

Supermarkets have also been angered by repeated suggestions by cabinet ministers that they have been profiteering from the sale of petrol to motorists, with studies by the competition regulator concluding that there is little basis for such an allegation.

The RJA was initially put together in 2022 by WPI Strategy, a London-based public affairs firm.

(c) Sky News 2026: Retail giants including M&S and Tesco warn PM over budget tax raid