Even John Lewis is struggling in this Labour economy

It is a worker’s cooperative. It promotes sustainability, emphasises its social responsibility, invests in its people, and, of course, has an attractive range of home accessories in every shade of beige you could possibly imagine. If the government is looking for a company that symbolises the kind of economy that Labour is trying to champion it would surely be John Lewis. But hold on. It turns out that even Labour’s favourite chain has been hammered by the tax raid in the last budget. And if even John Lewis can’t survive all the extra costs the party has imposed on business then who can.

There were signs that John Lewis, including its Waitrose unit, was starting to turn the corner after the hapless mismanagement of the former Treasury mandarin Dame Sharon White. Under the Tesco veteran Jason Tarry it was getting back to basic, well managed retailing. Today, however, that has come to a juddering halt. Pre-tax losses jumped from £30 million in the first half of 2024 to £88 million in the first half of this one. The reason? It has been hit by the extra cost of national insurance after the rate that employers have to pay was pushed up sharply on the last Budget, plus the government’s new Extended Producer Responsibility levy, a packaging tax that has been imposed as part of the drive to create a net zero economy. Put together, those extra charges cost the chain £29 million. 

The losses perfectly illustrate the shambolic incompetence of Labour’s economic ‘plan’. To start with, green levies are imposed because they sound good at climate change conferences, and make politicians feel better about themselves. But the costs to businesses are ignored. Next, the NI increase, far from being a tax on the mega-rich capitalists, is paid by chains that are struggling to survive. The taxes are imposed regardless of whether a company is making any money or not. Even loss-making businesses that are trying to turn themselves around have to pay them. 

Those losses matter. If John Lewis loses money it won’t be able to make any extra payments to its staff under its profit-sharing scheme. Perhaps even more seriously, it will limit its ability to invest in its stores, most of which still need to be constantly upgraded to keep up with its rivals, and complete its recovery. It may even mean store closures, and job losses, and it will certainly mean higher prices and fewer special offers for customers. You might think that a socially responsible workers’ cooperative such as John Lewis would be thriving in Labour’s Britain. But if it is struggling, it is hard to see much hope for anyone else.