Iceland Boss Warns Labour of Disastrous Impact from Shock Minimum Wage Increase

Richard Walker, the managing director of Iceland, has cautioned the Labour Party that a sudden and substantial rise in the minimum wage could potentially bankrupt his business. Walker, a former Conservative donor who shifted his support to Labour in January, acknowledged the importance of reforming working practices and improving employee compensation. However, he emphasised that any changes must be implemented gradually to prevent a catastrophic impact on businesses.

Labour’s comprehensive overhaul of workers’ rights, spearheaded by Deputy Prime Minister Angela Rayner, includes plans to protect employees from unfair dismissal from their first day of employment, eliminate zero-hours contracts, and raise the minimum wage. The Telegraph reported earlier this month that the Government was on track to implement these changes by 12 October, in line with its pledge to take action within its first 100 days in office.

Walker urged Labour to adopt a measured approach when introducing reforms, rather than opting for a sudden, sweeping change. He warned that an abrupt and significant increase in the national minimum wage would be disastrous, stating, “If Labour puts up the minimum wage and brings in day one rights, that’s fine, but it needs to be bled in slowly. If they turn around and say ‘the minimum wage is £15 now’, that would bankrupt us.”

The Iceland chief also expressed his belief that there is a place for zero-hours contracts, which Labour has labelled as “exploitative”. While he does not favour their use within his own supermarket chain, Walker acknowledged that some individuals, such as students or those seeking flexibility, may find them beneficial.

Despite the impending changes from the Government, Walker remains optimistic that Labour is still open to listening to concerns from the business community. He praised Chancellor Rachel Reeves for her accessibility and responsiveness, describing her as a “grown-up” who understands the importance of engaging with big businesses to drive the growth agenda.

Walker’s experience dealing with the Labour Party stands in stark contrast to his interactions with the Conservatives, which he characterised as a “closed shop” that became increasingly insular during their long tenure in power. He expressed disappointment with the way the Conservatives treated him when he attempted to become an MP, ultimately leading to his decision to leave the party in October.

As Iceland navigates the challenges posed by high levels of borrowing and the impact of rising energy costs and inflation, Walker remains focused on the supermarket chain’s future. With plans to open 30 additional “food warehouse” shops annually and the potential to double the current number of these larger, bulk-selling stores, Iceland aims to create jobs and contribute to the economy.

Walker is hopeful that the new Labour government will facilitate this expansion by addressing issues such as planning laws, benefiting both businesses and workers alike. He believes that Labour can successfully be the party of both business and workers, but stresses the importance of carefully considering and communicating any changes to worker rights to ensure a smooth transition for all stakeholders involved.