UK high street bosses press John Healey over budget costs of hiring young people
Major retailers and hospitality firms including Tesco, Costa Coffee and the Co-op met chancellor John Healey at No 11 on Tuesday morning to urge him to cut the cost of employing young people in his first budget.
UK high street bosses press John Healey over budget costs of hiring young people
The UK high street bosses' budget appeal was made in person: at the No 11 event on Tuesday morning, the chancellor heard from sector leaders including M&S boss Stuart Machin and Sainsbury's chief executive Simon Roberts.
What the retailers asked for
The discussion centred on the impact of the rise in employers' national insurance contributions (Nics). Businesses want a partial reversal of predecessor Rachel Reeves' move lowering the earnings threshold at which employers start paying Nics from £9,100 to £5,000 a year.
Retailers and hospitality firms argue the change contributed to a plunge in the number of high street jobs for young people and part-time workers, and to a rise in youth unemployment.
Their specific ask:
- Raise the Nics threshold to £6,000
- A change they argue would help create jobs
- They also say it would ease inflation pressures on high streets
Business rates and the chancellor's response
The firms also hope Healey will ease the burden of business rates, and a source close to the meeting expressed optimism on both fronts.
"It felt like they were listening," the source said.
Healey has vowed to ease the cost of doing business amid mounting pressures on firms from rising energy bills.
British Retail Consortium's case
Helen Dickinson, chief executive of the British Retail Consortium, said retail is a major driver of growth, supporting jobs, investment and communities across the country, and provides vital first jobs for young people.
She argued retailers' taxes were raised by 20% in two years, including an extra £6.5bn in new employment costs, and that any new costs would be paid by consumers at the till. According to Dickinson, the chancellor recognised these pressures, and there was a positive discussion about a shared ambition for growth and tackling youth unemployment.
The CGT question Healey has set aside
Away from the meeting, it was reported that Healey rejected calls from Labour MPs and thinktanks to use the budget to equalise capital gains and income tax rates. CGT is levied on the sale of assets - including second homes and shares - at significantly lower rates than wages.
The numbers behind the debate:
- In her first budget in 2024, Reeves raised CGT from 10% to 18% for basic-rate taxpayers and from 20% to 24% for higher-rate taxpayers
- Income tax rates stand at 20% basic, 40% higher and 45% additional
- Economists have suggested equalising the rates could raise £11.3bn a year for the exchequer
According to the Financial Times, Healey dismissed equalisation over fears it could deter inward investment, but may opt for a smaller CGT increase.
The idea has support within Labour's ranks. Defence secretary Wes Streeting floated equalisation during his ill-fated May pitch to be party leader as a "wealth tax that works". First secretary Louise Haigh argued in the journal Renewal in May - while on the backbenches before her return to cabinet - that CGT rates should be brought closer to income tax rates.
A Treasury spokesperson said decisions on tax are a matter for the chancellor to set out at fiscal events, rather than commenting on rumour or speculation, with the first budget the next step.
