Next boss Wolfson tells Healey: ‘You can’t spend your way out of a crisis’
Lord Wolfson, Next’s chief executive, has urged Chancellor John Healey to cut spending at next month’s Budget, warning, “you can’t spend your way out of a funding crisis”.
The retail boss has urged the government to clamp down on spending, avoid further tax hikes and slash planning red tape to boost economic growth.
He told the media on Thursday: “The only things that will really change the long-term trajectory [of the economy] are [the] government getting its spending under control and boosting supply-side measures.”
Wolfson, who has helmed Next for 25 years, added: “You can’t spend your way out of a funding crisis.”
As the October Budget approaches, retail bosses have ramped up pressure on the government to reform business rates and cut employment costs.
But Wolfson said Labour cannot afford any more tax cuts and should instead focus on cutting spending and commit only to supply-side measures that won’t require more funding. “The UK government is forecast to spend over £100bn more than its income this year, and has little room to increase its borrowing,” Wolfson wrote in Next’s half-year results on Thursday.
“So there is little or no room for the Government to stimulate growth through spending or alleviate inflationary costs in fuel and energy. […] There are only two effective ways out of this predicament: control spending or boost growth, preferably both.”
Wolfson told reporters that asking Labour for tax cuts would be too “strong,” adding that business should instead hope for the tax burden “not to go up more”.
“Any organisation cannot carry on spending significantly more than its income and, in one way or another, that problem has to be addressed,” he said.
Earlier this week, former Bank of England chief economist Andy Haldane accused Andy Burnham of presiding over a “traditional tax and spend socialist government with better TikTok videos”.
The Prime Minister hit back at Haldane, his former unofficial adviser, claiming that he is prepared to take difficult decisions at what will be a “challenging” Budget for British households.
Wolfson said the government could boost economic growth by slashing the red tape around building regulations, biodiversity rules and archaeological restrictions, which is “holding us back”. “I think releasing that pent-up demand would do a lot to boost growth,” he said.
Leave high streets alone, Wolfson says
Lord Wolfson also defended the natural “evolution” of the high street, amid criticism of Andy Burnham’s plans to revive UK high streets by cracking down on gambling and vape shops and cutting business rate bills for pubs.
Frasers Group founder Mike Ashley has dismissed Burnham’s high street policies as “populist,” while JD Wetherspoon founder Tim Martin said it is “not up to” the Prime Minister to choose what is on the high street.
Asked about Burnham’s high street plans, Wolfson said: “The most important thing that the government could do for British high streets is to let them develop. “Don’t try to decide ‘this should be a shop and that should be a restaurant and this should be a pub’. Just let the market do its work and transform British high streets into what people most want.”
In the UK, Next’s in-store sales dipped by 0.4 per cent in the six months to July, while online sales jumped by eight per cent. Wolfson said he expects high street sales across the group to continue to decline gradually in coming years.
He said: “What I’m saying is: don’t try and turn back the clock. If your aim is to get the high street back to where it was, you’re barking up the wrong tree.”