When Rachel Reeves visited her local Marks & Spencer store in Pudsey recently, she made a promise to staff that they would soon see more of their payslip in their pockets, instead of it going on energy bills or rising rents.
We know this because Reeves was at the West Yorkshire store as a guest of M&S chief executive, Stuart Machin, to go walkabout and see the latest investment the retailer has made in the modernised food hall.
Interestingly, Machin has written about her visit on the company’s website – highlighting her promise to staff – an approach which he welcomes.
But that’s where the niceties end. It’s almost as though Machin doesn’t believe the Chancellor, because he goes on to launch the most devastating rebuke of her last Budget, one which saw the ‘catastrophic’ £25billion rise in National Insurance, along with other new taxes hammering business and consumers alike.
As he reminds Reeves, this alphabet soup of taxes, including those for packaging, bottle deposits and a new energy tax, the Transmission Network Use of System tariff – which even he doesn’t understand – is sending bills sky high.
M&S’s own tax bill is now £650million, while the retail industry has been clobbered for £7billion and at least 100,000 jobs have been lost.
Cash or credit? Chancellor Rachel Reeves was a guest of M&S chief exec Stuart Machin at a store in Leeds earlier this year
More pertinently, Machin urges Reeves not to make the same mistakes again, and that she should ensure there will be no more tax rises in next month’s water-torture Budget, which is already hurting consumer spending with its drip, drip threats of tax increases.
And he’s right. We can see this fear creeping into official statistics. Consumer spending is sharply down while savings are up. Consumers are in a state of stasis, fearful of the months ahead. And it’s going to get worse.
The Bank of England recently forecast that another 3.6m homeowners face higher payments over the next year as they re-fix their mortgages.
Machin is also spot-on when he says the Chancellor has two choices ahead of her: ‘More of the same: plugging fiscal holes with tax rises, stoking inflation and suppressing demand.
‘Or change course: spend less, borrow less, tax less, regulate less, reduce inflation and enable growth.’
The second course is, of course, the right path to take, and the only one, as Machin puts it, that will allow the UK to break out of ‘our economic doom loop of ever higher taxes and lower growth’.
He also tells her to stop blaming everyone else: ‘We were told last year’s tax rises were a one-off, and I refuse to believe that geopolitics makes that pledge moot.
‘The world economy was volatile then, it is volatile now, and it will be volatile for the foreseeable future.’
Machin doesn’t stop rolling with the punches. He also lambasts Reeves and her colleagues for changing the inheritance tax rules for farmers, which will see many go out of business and inevitably lead to higher food prices.
Quite rightly, he argues the tax should be abolished, and rather than destroying our food industry, farmers should be encouraged to grow and produce more food here in the UK rather than less. (Perversely, we now produce 20 per cent less than we did in the 1980s.) He also has some rather good ideas for helping youngsters get back to work.
If only Reeves were as open to listening to business leaders like Machin as she promised she would be while out courting them ahead of the election.
Since then, the Chancellor has ignored every bit of advice given, so in thrall she is to those Labour backbenchers who resolutely oppose any cutbacks to spending, whether it be on welfare or any other part of public expenditure.
Yet if Reeves has any hope on earth of meeting her fiscal rules – and keeping her uncosted promise that Marks & Spencer staff will see more of their pay – she will have to grow an iron spine.
She must persuade Keir Starmer and the rebels that it’s either spending cuts or the game is up.
The irony is that the Government has a whopping majority – plus promised support from Kemi Badenoch – to push through spending reforms.
If the Chancellor has any hope of retaining any integrity, she should make doing so a resigning matter.
Stuart Machin would do the job rather well in her place.
DIY INVESTING PLATFORMS
AJ Bell
AJ Bell
Easy investing and ready-made portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free fund dealing and investment ideas
interactive investor
interactive investor
Flat-fee investing from £4.99 per month
InvestEngine
InvestEngine
Account and trading fee-free ETF investing
Trading 212
Trading 212
Free share dealing and no account fee
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.
Compare the best investing account for you
#rebuke #Reeves #Chancellor #deliver #spending #cuts #resign #MAGGIE #PAGANO
