John Lewis staff could miss out on a bonus for a fourth time in five years as costs soar after Labour’s anti-business tax-raising Budget.
The department store and Waitrose owner faces ‘tens of millions’ in extra overheads this year due to increases to National Insurance, business rates and the minimum wage.
It is feared the increased costs will mean another year without a bonus for the partnership’s 65,000-strong workforce.
The High Street has been reeling since the Budget in October when Rachel Reeves announced £40billion of tax hikes – including a £25billion rise in National Insurance – and an inflation-busting increase in the minimum wage.
Poundland was this week put up for sale – stoking fears for its 18,000 staff and more than 800 UK stores – with its owner Pepco blaming the increased tax burden.
And figures from the Office for National Statistics showed half of employers are putting up prices and a quarter are cutting jobs due to the National Insurance raid.
Under pressure: John Lewis faces ‘tens of millions’ in extra overheads this year due to increases to National Insurance, business rates and the minimum wage
Departing John Lewis chief executive Nish Kankiwala has said the decision to raise National Insurance while at the same time failing to reform business rates amounted to a ‘two-handed grab’ from UK business.
He recently warned that the firm faces ‘tens of millions’ of additional costs as a result of the Budget measures.
The impact on John Lewis of the looming tax hikes – which strike next month – will become clearer still on Thursday when chairman Jason Tarry presents its annual results.
Analysts believe that after a dismal period of decline, the employee-owned business is expected to post a profit of around £120million for 2024.
But retail expert Nick Bubb said it was ‘unlikely’ that Tarry will reinstate the group’s annual bonus for its 65,000-strong workforce.
John Lewis this week said it was spending £114million on increasing wages, with £38million of this due to the increases to the minimum wage.
The firm has not paid staff a bonus for three years out of the past four, after initially denying staff the payment in 2021 for the first time since 1953.
Although employees did receive a payout in 2022, they did not in 2023 and 2024.
John Lewis was one of many businesses to speak out after the Budget.
A spokesman for the company said: ‘No decision has yet been made on the bonus. Investing in our partners remains our key priority and we’re increasing Partner pay by £114million this year, that’s £295million in the past three years.’
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