Asda Chairman Urges Chancellor to Rethink Tax Plans Amid Soaring Food Inflation

Allan Leighton, chairman of Asda, has called on Chancellor Rachel Reeves to reconsider planned tax hikes in the upcoming Budget, warning that relentless taxation is stifling economic growth and further squeezing British households. Leighton’s intervention comes as food inflation continues to outpace incomes, causing real financial distress for shoppers across the UK.

Leighton emphasised the need for a shift in government strategy, advocating for greater investment in Britain rather than what he described as “taxing everything in some way shape or form.” The Government is under mounting pressure to find an estimated £50 billion this autumn to address a substantial gap in the public finances, prompting speculation about new and extended taxes. Potential measures include an income tax threshold freeze, increased levies on the gambling sector, and the introduction of a mansion tax targeting expensive property sales.

There is also talk of extending National Insurance to rental payments and raising business rates for larger commercial premises. Retailers are sounding the alarm, with Leighton joining Tesco and Sainsbury’s in warning that a proposed £1.7 billion increase in business rates for major supermarkets would be “very unhelpful.” He noted that, “All these things don’t make life easier. They are contributing to inflation, and inflation is hitting the pocket of the consumer.”

New Asda data revealed that even middle-class families are now experiencing a dip in disposable income—a trend not seen in two years. The British Retail Consortium reported a 4.2 per cent acceleration in food inflation. Households with lower incomes are being hit hardest, facing a 4.1 per cent surge in living costs in the past year, according to the Office for National Statistics. Rising rents, utility bills, and persistently high food prices are exacerbating the budget pressures. Peter Matejic of the Joseph Rowntree Foundation warned that many families are forced to skip essentials or borrow to get by, with seven million low-income households going without basics this summer.

To support shoppers, Asda has been intensifying efforts with suppliers to cut costs. Leighton stated that the supermarket will continue pushing for price reductions and work with those willing to “share the load.” He made it clear that Asda’s priority remains the customer, noting, “We try to do the right thing and if suppliers want to come with us, a lot of them do, we take that support. But if we think it’s the right thing to do for the customer, we’re going to do it anyway.”

Early signs suggest Asda’s approach is yielding some improvement. Sales fell by a slight 0.2 per cent on a like-for-like basis in the three months to June, marking their strongest quarter for over a year, with revenues reaching £5.3 billion. However, the supermarket warned that upcoming sales may be disrupted as it completes the long-awaited separation of its computer systems from former owner Walmart. Despite significant delays and setbacks over the previous four years, the £1 billion IT transition is now complete. Leighton acknowledged the importance of moving beyond these challenges to focus on Asda’s broader turnaround agenda.