Esther McVey has said the plight of Poundland highlights what she calls the fiscal failure of the government, as the discount chain's 600 stores and 12,000 workers sit on the verge of collapse.
Writing for the Daily Express, McVey said the chain's difficulties are not because customers have walked away – Poundland's sales grew by 6.7% in September – but because of the government's tax rises, which she argues make it impossible to run a business that works on slim profit margins to keep prices down.
Economic backdrop 'dire'
McVey described the current economic backdrop as dire, noting that consumer confidence has collapsed to its lowest level since July 2023, and public debt has breached the £3 trillion milestone. She added that millionaires, billionaires and wealth creators are fleeing the country, taking their money and jobs with them.
Compulsory liquidations have jumped 25% year-on-year, she said, and solvent business owners are looking to wind up their companies through voluntary liquidations to beat the Chancellor's rumoured capital gains tax raid.
Healey's first Budget
All eyes will be on new Chancellor John Healey on Wednesday as he steps into the House of Commons to deliver his first Budget. Healey has already let it be known his budget will not be anything like the two authored by Starmer and Reeves, with "doomerism" out and "breathing space" and "hope" in.
McVey said there have been very few leaks before this budget because there is not much to leak, and that Healey wants a steady-as-you-go budget – at variance with Andy Burnham's claim that he wants to bring about a new economic model which would be the biggest changes in 40 years.
Tax rises and borrowing
Healey's big spending announcements are set to be based on even more borrowing and debt, using 'off the books'-style schemes like Gordon Brown's PFI ones, McVey said. The heftiest tax rises are expected to fall on the banks, which she said would more than likely create a 2008-style 'credit crunch' by starving small businesses and homebuyers of money as banks cut back lending to pay their tax bill.
McVey concluded that this budget will not provide growth in every postcode and hope in hearts, but may provide just enough gimmicks to lay the grounds for an early election followed by hefty tax rises for all.
