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Retail bosses are to warn John Healey that a tax raid on shops will push up prices and worsen the cost of living crisis.

At a Downing Street summit with supermarket bosses on Tuesday, the Chancellor will be warned that retailers cannot absorb more costs and will pass them on to consumers.

Writing in The Telegraph ahead of the breakfast meeting, Helen Dickinson, the chief executive of the British Retail Consortium (BRC), warned that shops “cannot afford more bad decisions”.

Ms Dickinson said: “We will warn Healey that retailers cannot absorb endless costs, which means ordinary shoppers shoulder the burden. Families pay more for their weekly shop. Parents pay more for back-to-school clothing. Students pay more for a phone or laptop.

“It’s jobs, too. Retail employment is at its lowest level on record. Job losses do not just hurt retailers. They mean fewer opportunities for people to enter the workplace, less money earned and spent locally and less growth for communities.”

The Chancellor will meet executives from Tesco, Sainsbury’s, Amazon, Co-op and Marks & Spencer, among others, at the pre-Budget summit. Bosses are expected to caution Mr Healey that business rates, employment taxes and high energy costs are driving up inflation and killing employment.

Labour has enacted a series of tax increases since coming to power in 2024, including a £25bn raid on employers’ National Insurance Contributions that has been blamed for falls in the number of jobs in the retail, wholesale and hospitality industries.

Ms Dickinson, who will attend the summit, said: “Lazy thinking over the last two years has led to higher prices and fewer jobs. This will only get worse if government continues to treat retailers as a purse to be raided.”

HMV announced on Monday that it was closing its flagship Oxford Street shop just three years after reopening it, warning it had become “commercially unsustainable”. Zavvi, the online music and collectables retailer, separately fell into administration.

The warning to Mr Healey comes amid growing tensions between retailers and government ahead of the Budget on Oct 28.

Jason Tarry, the chairman of John Lewis and Waitrose, warned over the weekend that a tax raid on warehouses would trigger a wave of closures. Writing in The Telegraph, he said the mooted policy would “only harm our high streets”.

Mr Healey hastily ruled out an increase in business rates for warehouses in response.

However, the Institute for Fiscal Studies has warned that the Chancellor will need to find £35bn in either tax rises or spending cuts to meet all the commitments made by the Government.

New figures on Tuesday showed that shops suffered a sharp slowdown in sales last month. Sales grew by 1.3pc in September, compared to 2pc in the same month a year earlier. The BRC said the public were “still cautious with their spending ahead of expected rises in household bills and taxes”.

As well as warning against further tax increases, executives will also push the Chancellor to remove levies from energy bills and address the tax loophole that allows online Chinese retailer to sell goods into the UK without paying the same customs duties charged to British businesses.

Industry group UKHospitality, which will also attend the Downing Street meeting, is expected to push the Government to use Brexit freedoms to reduce the sector’s VAT rate to 10pc.

Proposed changes to the system which classifies foods as healthy or unhealthy are also likely to be discussed, amid concerns over the Government’s food strategy.

Tina McKenzie, the national chairman of the Federation of Small Businesses, said: “Ministers say they want growth, but growth does not happen by squeezing margins, making employment more expensive and putting barriers in the way of expansion.”

Andrew Griffith, the shadow chancellor, said: “Healey should use the meeting to take his boot of the neck of the retail and hospitality sectors.

“Number one should be shelving Labour’s anti-employment laws, followed closely by business rates relief.”

Robert Jenrick, of Reform UK, said an increase in the VAT threshold, a u-turn on National Insurance contributions and the end of the Employment Rights Act would help the economy.

“Small business owners need a government that stops punishing them for employing people and keeping their doors open,” he said.

Andy Burnham, the Prime Minister, will separately meet technology bosses in Downing Street to discuss AI on Tuesday. One technology source attending the gathering said they would be looking for signs that an increase in Capital Gains Tax was off the table and confirmation of no new “dramatic” AI regulations.

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Retailers cannot afford more bad decisions

By Helen Dickinson

On Tuesday, I will be meeting the Chancellor with other retail leaders to discuss what the retail industry needs from the Budget. We will be clear: the choices he makes at the end of month will determine whether more shops open or close, whether retail jobs grow or decline and whether prices rise faster or slower.

The Chancellor wants to breathe new life into our high streets and deliver growth in every postcode. We will tell him that retailers share that ambition, but government policy must help businesses deliver it rather than make it harder.

Our latest consumer polling shows these are exactly the issues people want the Chancellor to focus on. Almost nine in 10 people (89pc) want government to prioritise reducing the cost of living, while 83pc want action on youth unemployment and 77pc say improving Britain’s high streets should be a priority.

The public are spot on. Retailers – and so, it appears, the Government – also want the same things. Our message to the Chancellor will be simple: policy must now match that ambition.

We cannot afford more bad decisions. The 2024 Budget lowered the employer National Insurance contributions threshold and raised the rate, leading to 122,000 retail jobs being lost in two years. The 2025 Budget put embattled high streets under further strain with higher business rates.

The industry tax burden is up 20pc over those two years to £41bn in 2026/27. Put into perspective, that’s almost £3 in taxes for every £4 of profit made – a higher tax burden than any other sector of the economy, alongside hospitality.

We will warn Healey that retailers cannot absorb endless costs, which means ordinary shoppers shoulder the burden. Families pay more for their weekly shop. Parents pay more for back-to-school clothing. Students pay more for a phone or laptop.

It’s jobs, too. Retail employment is at its lowest level on record. Job losses do not just hurt retailers. They mean fewer opportunities for people to enter the workplace, less money earned and spent locally and less growth for communities.

Almost three million people work in retail – a career open to people whatever their qualifications or where they live. One in five people started their career in the industry.

Retailers want to be part of the solution. Last month, more than 40 retailers helped us launch Opening Shift, a BRC-DWP-led initiative to create thousands of work experience placements for those left behind. This is a crucial step towards an industry goal of creating 100,000 paid jobs for Neets (those not in education, employment or training) by 2029.

But on Tuesday we will challenge the Chancellor on a fundamental contradiction: government cannot expect businesses to create more jobs while continually making them more expensive to provide. Lazy thinking over the last two years has led to higher prices and fewer jobs. This will only get worse if government continues to treat retailers as a purse to be raided.

So how do we fix it?

To start, the Chancellor should cut the cost of employing young people by raising the National Insurance threshold to give businesses greater capacity to take people on. He should address the rising cost of running and investing in shops by freezing business rates, which otherwise will rise faster than UK growth, and ending the new surtax that penalises larger stores.

These steps would help deliver exactly what the public wants. A new store creates local jobs and attracts shoppers. Investment in an existing store strengthens a high street and supports surrounding businesses. More people in work means more money earned and spent locally.

This is the central message we will take to the Chancellor on Tuesday: you cannot tax your way to growth by squeezing the businesses expected to deliver it. Giving one of the most highly taxed industries in the UK more room to invest is a route to more jobs, stronger high streets and greater growth.

Retail is committed to playing its part. The public, government and retailers want the same outcome. This Budget is the Government’s opportunity to show that its policies match those ambitions, and make it easier to deliver them, not harder.

Helen Dickinson is chief executive of the British Retail Consortium