Next versus Treasury
This statement in Next’s annual-results announcement caught my eye this morning:
“Trading conditions in the year ahead will continue to be difficult as increased costs and rising taxes put pressure on our customers.”
Or to put it another way, the chairman of Next, John Barton, seems to be heaping responsibility on the chancellor for the slowdown on the high street.
Now you may think there’s nothing terribly remarkable about that. After all, Next’s chief executive, Simon Wolfson, is matey with the new generation at the top of the Conservative party and there was a tax-raising Budget last week.
But the typical rule at publicly listed companies is that they don’t dump on the incumbent government for stewardship of the economy – usually because those companies think it’s sensible to be on reasonable terms with those who have the power. Cohabitation with ministers is unavoidable and shareholders get a bit antsy if that cohabitation becomes fractious.
There is an exception to that rule. If the prevailing wind becomes so strong against a ruling party, then businessmen often rediscover their critical voice.
So it will worry Gordon Brown and Alistair Darling that Next has piped up. And they’ll be fearful that other listed companies will join in the chorus of implicit criticism.
Hands believes that Darling’s changes to capital gains tax and the taxation of non-doms are damaging his industry.
But the political significance of Hands’s remarks is a little bit less than those of Next.
Privately owned businesses, like Terra Firma, have always found it easier to put the boot in to politicians.
They can say more-or-less what they like, because they’re not answerable to pension-fund shareholders and the millions of pensioners who depend on those funds.
By the way, Next’s shareholders might want to ask the retailers’ directors whether last year’s fall in sales at Next’s existing stores was all the fault of the government, or whether management shares some of the responsibility.