M&S and John Lewis bosses warn chancellor over business rates ahead of budget

The bosses of Marks & Spencer (M&S) and John Lewis have urged the government to reform business rates, saying the tax burden risks heaping more pressure on high street shops.

The warnings by the heads of two leading UK retailers come ahead of John Healey's first budget as chancellor on 28 October amid a challenging economic environment for the government.

M&S chief executive Stuart Machin says he has written to Mr Healey directly "to set out what needs to change, and why it can't wait".

Mr Machin has suggested six ways the chancellor "could get Britain growing by taking the handcuffs off business and putting money back in people's pockets".

They include a call to "fix business rates", with Mr Machin arguing the retail sector pays a disproportionate share.

He said retail accounted for 5% of the economy but paid more than a fifth of all business rates, calling the situation unsustainable.

"It's right to support the pubs, bars and music venues on high streets that bring our towns to life," he told the Daily Mail.

"But if you do that by taxing supermarkets, you're paying for a cheaper pint by loading costs on to the weekly shop."

Mr Machin also called for the government to reverse the cut in the threshold at which employers start paying National Insurance, arguing the change had damaged retailers.

"It also hit our suppliers, particularly in farming and food manufacturing, and strict regulations meant most of those costs ended up with retailers," he said.

"These pressures were always going to be felt at the till."

Mr Machin said the previous two budgets under ex-chancellor Rachel Reeves were a "disaster", adding: "At M&S, we were left facing £150m of new costs each year, on top of a tax bill of around half a billion pounds."

Meanwhile, the IPPR think tank has proposed imposing a 2% tax on online sales to support bricks-and-mortar businesses.

But writing in The Telegraph, Jason Tarry, the chairman of John Lewis, which owns Waitrose, said the proposals were based on "a fundamental misunderstanding of how modern high streets work".

He said: "Major department stores and supermarkets, including our 36 John Lewis stores and hundreds of Waitrose branches, act as vital anchor tenants.

"They generate the primary footfall that sustains surrounding independent shops, pubs, bakeries and cafes.

"Penalising anchor retailers through higher business rates risks harming the smaller businesses operating in their orbit."

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There was a case for "online retail shouldering a fairer share of tax", Mr Tarry admitted, but said it was wrong to view modern retail as "a zero-sum game of physical shops vs online".

Instead, he urged the government to reform the "archaic" business rates system to support businesses that make "an additive contribution to local civic life".

With inflation and borrowing costs being pushed higher amid the fallout from the Iran war, Mr Healey will not have much room for manoeuvre while keeping to the fiscal rules the government has set.

He also faces pressure to hike defence spending and invest in public services, while trying to provide the "breathing space" against the rising cost of living promised by Prime Minister Andy Burnham on his first day as prime minister.

(c) Sky News 2026: M&S and John Lewis bosses warn chancellor over business rates ahead of budget