The founder and chief executive of electricals retailer AO World has labelled plans to increase welfare spending in the upcoming Budget as “madness”, urging the Chancellor to focus on cutting costs rather than raising taxes on businesses.
John Roberts told the PA news agency that the Labour government needed to “man up” and make difficult decisions to repair the nation’s public finances. He criticised speculation that the two-child benefit cap would be scrapped, saying it was “madness” to boost welfare spending while the economy requires repair.
Roberts argued that the government should look at its own spending to plug the fiscal black hole, rather than hitting businesses with more taxes. “It gets demonised in this government and all it’s seen as is a source of more and more tax that they can then blow on the welfare budget,” he said.
He also took aim at the Cabinet, claiming they “couldn’t run a bath let alone a business” and lacked business experience. His comments came as AO World reported a 10% rise in pre-tax profits to £18 million for the six months to September 30, despite incurring around £4 million in extra costs from the government’s increase in national insurance contributions and the national minimum wage in April.
The group’s annual profit guidance was raised to between £45 million and £50 million, helped by the popularity of its membership programme. AO World also launched a new Switch24 service, offering Apple iPhone 17 handsets from £17 a month, which Roberts described as a “first in the UK market” and a “great example of AO continuing to disrupt and innovate”.
Shares in the firm rose 6% on Tuesday morning following the results. Peel Hunt analysts said the Switch24 deal was a “compelling offer for members” and noted that the membership programme could double AO’s market share.
