Dave Lewis said the increase in business rates and the new national living wage could put pressure on employment in the UK retail sector.
Ahead of the budget on Wednesday, Tesco’s CEO said the government will be putting retail jobs at risk if it does not undertake a fundamental review of business rates. He also warned the chancellor, George Osborne, that business rates were “completely disproportionate”, and the way in which they are linked solely to property puts traditional retailers operating from physical stores at a disadvantage.
A report by the British Retail Consortium said there could be 900,000 fewer jobs in retail by 2025. Dave said the report was a “fair reflection” of the outlook for the retail sector, which is a major employer in the UK. He said that retailers face £14bn of extra costs in the next five years from an increase in business rates and George’s introduction of the “national living wage” in 2016.
“If the government is not careful, it is going to keep piling on the burden,” he said. “Business rates are the single biggest tax Tesco pays – £700m a year.”
Last month, documents revealed that Tesco is considering cutting store staff by 39,000 over the next three years as the retailer tries to reverse a decline in profits. The company cut thousands of jobs last year as part of efforts to reduce costs, although Dave said there were no current plans to go further.
Dave’s focus on business rates was echoed by the British Chambers of Commerce. Its acting director general, Adam Marshall, said: “Ministers must also finally take action to ease the burden of business rates. Reform of the rates system is long overdue and a source of uncertainty for companies everywhere. In an increasingly uncertain economic environment, the chancellor should avoid any and all moves that could damage business confidence. At a time when many businesses already face sharply higher costs and taxes, the chancellor must avoid adding any new obligations on our firms.”
Last year George Osborne launched a review into business rates, which are based on commercial properly values, and since then has promised to give local authorities control over business rates by 2020.