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Sharp criticism of the government’s tax approach from Ashley

Mike Ashley has sharply criticised the government’s cost-of-living and retail policies in a letter to UK Prime Minister Andy Burnham. The Frasers Group founder argued that business rates and rising employment costs are putting heavy pressure on companies, and called for a sweeping overhaul in this area.

Ashley also opposed the idea of charging large warehouses higher tax to fund discounts for pubs, clubs and live music venues. In his view, the plan could create a new cost imbalance between physical stores and logistics infrastructure. Ahead of Burnham’s first budget on 28 October, Ashley called for a cut in employer costs.

Downing Street said the government aims to build a new economy that supports British businesses, spreads growth across the country and makes essential spending more affordable again. The statement said scrapping VAT on household electricity bills and tax cuts for some companies were only the beginning.

What are the main cost pressures facing retail?

The risks Frasers Group has put on the agenda

The government is reviewing the tax system on commercial properties. Before that review, a 20% business rates discount from April was announced for pubs, social clubs and live music venues. Burnham had previously said such discounts could be funded by higher taxes on warehouses used by online companies.

  • Rising employment costs and the overall burden on employers
  • The impact of extra tax on large warehouses on retail profitability
  • The financial structure of vacant high street properties

Ashley argued that high street store formats will weaken further without a comprehensive reform. In his letter, he described the government’s approach to new tax measures as,

in Ashley’s words, “too little, too late”
.

Frasers Group’s scale and why it matters to markets

Frasers Group owns brands including Sports Direct, Flannels, House of Fraser, Game, Evans Cycles, Slazenger, Jack Wills and Gieves & Hawkes. The group, which continues to operate under the structure Ashley created and is now run by his son-in-law Michael Murray, is a major retail player employing around 30,000 people.

In his letter, Ashley also said retail theft costs the company about £40 million a year. The company’s purchase of luxury retailer Harvey Nichols this month, along with a major restructuring plan for the business, suggests that cost pressures and growth strategy are being pursued at the same time.

Frasers Group is also increasing its stake in German clothing company Hugo Boss. The picture has led Ashley’s criticism of the government to be seen not only as a political attack, but also as a warning about the impact of tax, employment and security costs on the balance sheets of large retailers.

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