Mike Ashley, founder of Sports Direct, has criticized the recent cost of living and retail policies proposed by Andy Burnham, labeling them as 'populist reactions.' In a letter addressed to the Prime Minister, Ashley accused Burnham of 'jumping on everyday fixes or bandwagons,' while attributing struggles faced by businesses to 'disastrous' business rates policies and rising employment costs. Ashley specifically referred to a proposal to increase business rates on large warehouses to subsidize reductions for pubs and clubs as 'delusional.'
A spokesperson from Downing Street responded by stating that Burnham aims to 'build a new economy that backs British business' and ensure essential services remain affordable. They noted that promises such as cutting VAT on household electricity bills and reducing business rates for certain firms are 'just the start.'
Earlier in the month, Burnham announced plans to revitalize the UK’s high streets by enabling councils to restrict the establishment of new vaping and betting shops. He also proposed measures to eliminate subscription traps and prevent misleading pricing practices in retail.
In his letter, which was first reported by the Financial Times, Ashley urged Burnham to prioritize lowering employer costs and revising the government's stance on business rates in his upcoming Budget, scheduled for October 27. He highlighted that pubs, social clubs, and live music venues are set to receive a 20% reduction in business rates starting in April, and a review of the tax calculation is underway.
Ashley criticized what he termed 'shortsighted or populist reactions' to the challenges facing businesses. He has consistently advocated for a comprehensive reform of the tax system to create a level playing field between high street retailers and online competitors.
He expressed concern that increasing taxes on larger retailers, particularly through higher business rates on warehouses, while reducing rates for pubs and clubs, is misguided. Burnham had previously suggested that cuts for pubs and clubs could be funded by imposing higher levies on warehouses operated by online companies like Amazon and targeting owners of vacant high street properties.
Ashley founded Frasers Group in 1982, growing it from a single Sports Direct store to a large conglomerate with 30,000 employees. His business practices have drawn criticism, including a 2016 admission of underpaying workers at a warehouse and an unacceptable policy of penalizing employees for tardiness. Recently, the company acquired luxury department store Harvey Nichols and announced plans for significant restructuring.
In his letter, Ashley also inquired about Burnham's strategy for revitalizing Harvey Nichols, which has encountered financial difficulties. He echoed sentiments from Lord Rose, a Tory peer and former Marks & Spencer CEO, who described Burnham's announcements as 'hot air.' Ashley reiterated that the primary issues affecting businesses are the unfavorable business rates and rising employment costs. He warned that without substantial reforms, the high street will face further decline, and he criticized Burnham's proposals as 'too little, too late.' Additionally, he challenged Burnham's plans to address misleading pricing practices, arguing that the real problem lies in price fixing within the sporting goods sector, citing the increasing costs of official football merchandise.