When I took on the role of chief executive, my chairman, Archie Norman, emphasized a crucial lesson that has stayed with me: “Make decisions for the lifetime of Marks & Spencer (M&S).”
He urged me to consider not just the immediate reporting period or my tenure but to value the 140-year legacy of this iconic British company and the future customers we will serve.
After years of stagnation, M&S found itself in a vulnerable state. It would have been easy to simply raise prices for a quick profit boost for shareholders, but that wouldn’t be the right choice. Instead, we focused on investing in value and quality, regaining our customers’ trust as we continue our transformative journey.
I can only speculate about the immense pressure the Chancellor faces as she approaches her budgetary responsibilities. Current levels of economic growth are unsatisfactory, government debt is alarmingly high, and our productivity lags behind many international counterparts.
However, I frequently hear discussions indicating that the primary difficult choices in the upcoming budget revolve around increasing taxes. This perspective misses the point. Raising taxes is often seen as an easy, short-term solution. The real challenge lies in fundamentally reshaping the British economy and addressing the long-standing issues that have impeded our progress for decades.
M&S stands among the largest taxpayers in the UK, contributing £480 million to the Treasury. We take pride in supporting public services that our local communities depend on for their success.
I fully endorse the new government’s initiative to ensure that work is rewarding. M&S avoids zero-hours contracts and exceeds the proposed standards for maternity and paternity leave, reflecting our commitment to our employees.
Nonetheless, I express concern over plans to raise national insurance, a tax that disproportionately affects larger employers like us and our smaller suppliers, with no direct correlation to profit. The Chancellor previously described national insurance as a tax on workers, and raising it complicates our ability to offer substantial job opportunities. This challenge becomes even greater if additional taxes are introduced that affect retailers, such as business rates or fuel duties. Increasing these taxes is not a tough choice; it is an easy escape. While it may yield short-term improvements to public finances, it complicates the path to economic recovery and impacts our customers and employees, who continue to cope with a rising cost of living.
A true turnaround begins with acknowledging the stark reality. This requires clear communication with the public, steering clear of “kitchen-sinking” tactics that involve endlessly reiterating grievances to fit a political agenda. Following a period of negative news, consumer confidence has plummeted. We need straightforward, optimistic messages and forward-thinking leaders.
After recognizing the truth, the next step is presenting actionable solutions. While Labour’s manifesto outlined several commendable pledges, my concern is that the governing process may dilute these intentions. The government must ensure that ambitious reforms regarding business rates and flexibility in apprenticeship levy usage remain prominent in the upcoming budget announcement.
The true challenge lies in implementation. The government is correct in stating that fostering investment hinges on eliminating bureaucratic barriers, which transcends merely streamlining the planning process. As decisions surface regarding new regulations or proposed developments, political and activist pressures will inevitably increase, yet they must adhere to their commitments. Numerous businesses face an array of regulatory obstacles that inflate costs and complicate operations with little public benefit.
I hope the speculations circulating in recent weeks are overstated. This government was elected to champion a growth agenda, yet the information disclosed thus far does not present a unified narrative for growth. The upcoming budget presents an opportunity to rectify this.
Stuart Machin is the chief executive of Marks & Spencer