New Chancellor John Healey is under pressure, but his first move—attacking supermarkets—mirrors the discredited tactics of his predecessor Rachel Reeves. With the national debt heading for £3 trillion and gilt yields near 5%, Healey cannot borrow more or raise taxes further, so he's looking for a scapegoat.
Healey's Scapegoat Problem
Reeves blamed the Conservatives for everything, citing a 'black hole' in public finances. Healey can't do that because the previous Chancellor is Reeves herself, still a Labour MP. So he's turned on supermarkets, accusing them of taking shoppers 'for a ride', just as Reeves did with 'price gouging' claims.
These accusations are baseless. Supermarkets like Tesco and Sainsbury's operate in one of Britain's most competitive industries, with wafer-thin margins. Sainsbury's retail operating margin fell from 3.3% to 2.7% in the 2024/25 financial year.
Cost Pressures on Supermarkets
Labour's policies have driven up supermarket costs. Tesco, the UK's largest private sector employer with over 300,000 staff, faces a £250 million annual hit from the employers' National Insurance hike. Two inflation-busting minimum wage increases and a £1.5 billion grocery packaging tax add further pressure, with the latter adding £56 to shopping bills.
In its last financial year, Tesco paid £6.7 billion in tax—almost four times its £1.8 billion statutory profit. It works harder for the Treasury than for its shareholders. Healey's attacks on petrol stations have also led to increased abuse of forecourt workers, as seen after Reeves made similar claims.
Business Confidence Falters
British business is losing faith. BP is pulling out of the North Sea, and AstraZeneca is considering moving its listing to New York. Healey's tactics are dangerous, and he's leaving Britain sweating before his Budget on October 28, just as Reeves did. Instead of clearing up the mess, he's digging deeper.
