Primark owner warns of threat to high street from NI rise

The boss of Primark has warned the national insurance rise for employers will weigh heavily on the UK high street as the company behind the value fashion retailer reported a rise in annual profits.
George Weston, chief executive of Associated British Foods, which owns Primark alongside food and sugar brands, said he was preparing for a big jump in business costs after the chancellor introduced various tax increases in last week’s budget.
He warned that the planned increase in national insurance contributions would push up its bill by “tens of millions” and that the change in threshold would “impact high street city centre businesses more than many others, whether it’s food, whether it’s shops. I think it falls disproportionately on high street players. If you’re running a pub, if you’re running a restaurant, you’re probably using a lot of low-hours staff.”
Rachel Reeves said the amount businesses will pay on their employees’ national insurance contributions would increase from 13.8 per cent to 15 per cent from April 2025. She also lowered the £9,100 threshold at which employers start paying national insurance on employees’ earnings to £5,000, in what she called a “difficult choice”.
Weston also echoed Sir James Dyson’s concerns after Labour’s decision to impose inheritance tax on farmers, claiming that the farming community had been “ill-served by policymakers for quite a long time. [This] is one more thing that the farming community has been obliged to face.”
His remarks came as AB Foods reported that its pre-tax profits had risen to £1.91 billion — up from £1.34 billion — in the year to September 14.
Revenue at the FTSE 100 group rose by 2 per cent to £20 billion over the period, up from £19.75 billion last year, after a stronger performance from its food division and a solid outcome from its Primark clothing business was partially offset by further pressure on its sugar operations.
The group announced plans to distribute a special dividend of 27p a share on top of the final dividend of 42.3p a share. It said it would also return an additional £500 million to shareholders over the next year.
The update sent shares in ABF up by 73p, or 3.2 per cent, to £23.62.
ABF, which is controlled by the billionaire Weston family, operates in 55 countries and employs 133,000 people. As well as its sugar business, it owns Primark and makes products such as Twinings Tea, Kingsmill bread and Ryvita crackers.
The sugar business is about 20 per cent the size of Primark in terms of profit contribution. The discount fashion chain, which operates around 440 stores worldwide, accounts for about two thirds of ABF’s profits.
The company reiterated that falling European sugar prices would have a “significant” impact in the coming financial year.
Grocery sales rose by 4 per cent during the latest year, while Primark sales grew 6 per cent, which it credited to a “strong performance” in the US, France, Spain, Italy and central and eastern Europe, as well as growth in the UK, its largest market.
ABF said it expected its store rollout programme to contribute about 4 to 5 per cent every year to Primark’s total sales growth for the foreseeable future.
Weston welcomed the government’s commitment to lower business rates for high street stores to help “level the playing field” with their online rivals.
“We have been hoping for a rebalancing between the tax burden placed on online and physical retailers for years and years. We haven’t seen it yet,” he said.
He said the business rates system was unfair and it was “unfortunate that high street city centre anchors [stores] run the risk of being penalised for being big locations”.
The ABF boss said it was also “unfortunate that nothing has been done to address the loophole on import duties that more and more online retailers are exploiting. I think that could have been closed and it seems that it hasn’t.”
Retailers such as Shein and Temu ship directly from China in smaller parcel sizes, instead of shipping stock in bulk to fulfilment centres in the UK and then distributing parcels. This means they do not have to pay import duties as shipments worth less than £135 avoid tax, known as the “de minimis” rule. Parcels above that value can incur customs duties of up to 25 per cent.
When asked if Primark had raised concerns to the government about it, Weston said: “This government, the last government, were well aware of the subsidy that is being brought to their attention by many high street retailers.”