Corporate Britain must pin the blame for price rises squarely on Rachel Reeves

Rachel Reeves
Rachel Reeves

Sainsbury’s has said it will have to charge more. M&S has warned it cannot rule out price rises and even JD Wetherspoon, a company that is usually about as keen on price rises as Sir Keir Starmer is on buying his own suits, is getting in on the act.

One by one, the UK’s major companies have been stating an obvious point. The huge tax rises imposed by the Chancellor Rachel Reeves will increase costs, and those will have to be passed on to the rest of us.

There is no point in just complaining about that. In reality, corporate Britain needs to fight back with “Rachel surcharges” and “Reeves deductions” – because if it doesn’t, it is just going to get raided for more money time and time again.

It has started to become a routine part of the standard results announcement. Along with the profit-and-loss statement, an update on expansion plans and the standard guff about its commitment to the environment, Britain’s major companies have started to add something new: a handful of regretful remarks about how prices will have to be increased.

On Thursday, Simon Roberts, the chief executive of Sainsbury’s, warned that the retailer would be forced to raise prices because of the “barrage of costs” it was facing. Earlier in the week, Stuart Machin, the boss of M&S, said the chain “would have some pretty significant costs to be mitigated against” after it worked out that it would have to find another £60m a year to pay the Government.

BT’s boss Allison Kirkby said the company was facing payments of an extra £100m a year and while it would look for savings elsewhere, price rises might well prove inevitable. Even your local ’Spoons won’t be as cheap as it used to be. “All hospitality businesses, we believe, plan to increase prices,” admitted chairman Tim Martin.

We can expect a whole series of price warnings over the next few weeks as company after company announces its results. At this rate, it won’t be long before the Greggs sausage roll breaks the £2 barrier. Prices are going up fast, and the momentum behind that now looks unstoppable.

Of course, it is easy to understand why it is happening. In her Budget last month, Ms Reeves imposed a steep rise in the employer’s rate of National Insurance taking an extra £24bn directly out of companies. The minimum wage was increased by another 6.7pc, well ahead of the rate of inflation.

And a blizzard of new labour laws are about to push up the non-salary costs of anyone who is on the payroll. You can argue about whether those decisions were justified or not. But there is no denying one very simple point. It is going to add significantly to the costs of business, and the more people they employ the more expensive it will prove.

Most companies are already operating as efficiently as they can – unlike the public sector, of course – and will have no choice but to pass that on in higher prices for their customers, lower wages for their staff, and reduced dividends for their shareholders. Chief executives are simply being honest by pointing that out.

On most political issues, companies opt for a quiet life, and that is perfectly understandable. It is never wise to make an enemy of the Government, and no one listens to them anyway. Typically it achieves nothing.

And yet, this time is different. The public has fallen for the lie that corporate taxes don’t impact them. And so long as that is true, this Labour government will simply raid them again and again.

No one believes that the £24bn raised in the Budget will be enough, given the amount of money that Labour wants to spend over the next few years. Pushing up corporate taxes is easy, it raises lots of cash, and it doesn’t cost any votes. It will happen again and again over the next five years.

Corporate Britain needs to fight back against that, and it needs to do so collectively. Like how? To start with, price stickers could come with “Rachel surcharge” attached to them. An extra 50p on an M&S shirt, a couple of quid on your monthly BT broadband bill and 10p on a loaf of bread at Sainsbury’s directly labelled as the cost of the extra NI charges would bring home to people how much the tax raid was costing them every time they are out shopping or paying the monthly bills.

Wage slips could have a “Reeves deduction” on each one, setting out in pounds and pence how much less each person was being paid because of the cost of paying the extra taxes that have now been imposed on top of every salary. And every dividend statement could come with a “Budget penalty”, explaining how profits are lower as a result of the Chancellor’s plans, and payouts to shareholders have had to be reduced to cope with that.

Even better, it could be set out in everyone’s pension statement, so that they are aware they will be poorer in retirement as well.

It can’t happen unless all the UK’s major companies act together. And yet, right now businesses are just sitting ducks. They are going to get raided time and time again, until we end up like France, where as well as having some of the highest social charges in the world, the Government has just imposed billions of euros in “temporary surcharges” on the 400 largest companies to try to fix the mess it has made of its budget.

That will only change when the voters start to understand that ultimately we all pay corporate taxes – and that will only happen if the businesses themselves start spelling it out to their customers.