Full Breakdown
Tesco's Ken Murphy Warns Against Further Tax Increases Ahead of Budget
10/2/2025, 8:50:39 PM
Tesco's Financial Outlook and Tax Concerns
Ken Murphy, the chief executive of Tesco, has expressed strong concerns regarding potential tax increases in the upcoming Budget, scheduled for November 26. Murphy emphasized that the retail sector has already faced significant financial burdens, including a £235 million increase in employer National Insurance contributions and a £90 million charge from the new Extended Producer Responsibility (EPR) packaging levy. He stated, “In the last Budget, the sector incurred substantial additional operating costs and we’re doing our best to deal with them but enough’s enough.” Despite these challenges, Tesco has raised its profit forecast for the year, now expecting between £2.9 billion and £3.1 billion, up from a previous estimate of £2.7 billion to £3 billion.
Impact of Recent Tax Changes
The recent tax changes have placed considerable strain on UK retailers, with the Food and Drink Federation predicting that the EPR tax alone could cost UK producers £1.1 billion. Murphy noted that these costs are likely to be passed on to consumers, leading to increased food prices. He urged Chancellor Rachel Reeves not to impose further tax burdens that could hinder the industry's ability to provide value to customers. Murphy stated, “What we’d love to see is a Budget that’s pro-growth and pro-jobs which, as a result, will help customers with the cost of living.”
Criticism from Unions and Industry Leaders
The Unite union has criticized Tesco for profiting during the cost-of-living crisis, with general secretary Sharon Graham stating, “As millions of workers struggle to put food on the table, Tesco is raking in huge amounts of cash and paying out whopping dividends to shareholders.” This sentiment reflects a growing concern among labor groups about corporate profits amid rising living costs.
Official Responses and Future Considerations
A Treasury spokesperson defended the government's tax decisions, asserting that they have prioritized investments in public services and wage increases for workers. They highlighted that corporation tax has been capped at 25% and that reforms to business rates are underway. However, there are indications that the government may reconsider the proposed higher tax rates for large retailers, including supermarkets, due to concerns that such increases could exacerbate food inflation.
Conflicting Reports on Business Rates
There is ongoing debate regarding the potential increase in business rates, which could rise by an estimated 26% across London if the current proposals are implemented. Critics argue that this would disproportionately affect larger retailers, further complicating their ability to maintain competitive pricing. John Webber, head of business rates at Colliers, has voiced concerns that the government appears to respond more to vocal industry leaders rather than pursuing a comprehensive strategy.
Verbatim Quotes
- “In the last Budget, the sector incurred substantial additional operating costs and we’re doing our best to deal with that but enough’s enough,” — Ken Murphy, CEO of Tesco
- “As millions of workers struggle to put food on the table, Tesco is raking in huge amounts of cash and paying out whopping dividends to shareholders.” — Sharon Graham, General Secretary of Unite
- “The tax decisions we took at the Budget last year mean that we have been able to deliver on the priorities of the British people, from investing in the NHS to cut waiting lists and putting more money in their pockets with a wage boost for millions.” — Treasury Spokesperson
As Tesco navigates these financial challenges, the upcoming Budget will be critical in determining the future landscape for UK retailers and consumers alike.
