Sports Direct chief calls for 20% tax on online sales

Mike Ashley tells MPs mainstream high street is ‘already dead’

Sports Direct chief executive Mike Ashley told MPs the mainstream high street was “in the bottom of the swimming pool, dead”.

Sports Direct chief executive Mike Ashley told MPs the mainstream high street was “in the bottom of the swimming pool, dead”.

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Mike Ashley, the chief executive of Sports Direct, told MPs that they should impose a 20 per cent tax on online sales in a bid to save bricks-and-mortar stores.

Appearing in front of the Westminster committee for housing, communities and local government, Mr Ashley said it was pointless discussing what high streets might look like in 2030, which is the committee’s remit, since outside of London’s main shopping district and some shopping centres, the sector was already in crisis.

“The mainstream high street as we think about it today – not Oxford Street, not Westfield – is already dead. Dead. They can’t survive. Their patient has died,” he said. “They are in the bottom of the swimming pool, dead.

“The high street has to change what it offers consumers. What people were doing before will not be right now and I can guarantee will not be right in the future.”

The entrepreneur, who is also the owner of Newcastle United football club, said retailers were being hobbled by “prehistoric rents that are no longer correct” and that councils should be able to offer five-year holidays on business rates in return for retailers matching that pound for pound with investment in stores, with penalties to deter manipulation. “People cheat,” he shrugged. “That’s what businesses do.”

He reserved special ire for what he termed “the web boys” for hollowing out Britain’s high streets. “Debenhams didn’t suddenly become a bad retailer,” he said, referring to the difficulties at the department store group in which he owns a 29 per cent stake.

Mr Ashley proposed a 20 per cent tax on the online sales of those retailers for whom online revenue accounts for more than 20 per cent of the total, cheerfully admitting that this would hurt his own company. “You have to tax the internet for the good of the high street. Tax the web boys 20 per cent. And I’ve already said I have a £400 million [€450 million] online business, so that’s going to be a big bill,” he said, urging legislators to do “something cataclysmic” that would force even Amazon to invest in physical retail.

Proposal criticised

His proposal was immediately criticised by Mark Price, the former head of Waitrose, who tweeted that it “just put legacy players with underinvested internet offerings at an advantage”. The British Retail Consortium has also rejected the idea of a blanket tax on online sales.

In an occasionally bad-tempered session – he accused MPs of “showboating” when they asked him about Sports Direct’s use of zero-hours contracts – Mr Ashley refused to give commitments regarding the number of House of Fraser stores that might be kept open or jobs retained.

“House of Fraser has got to be a totally different business to what it was,” he said, adding that “only God” could promise to keep all 59 stores open. “I’m not Father Christmas. I believe I’m a very fair guy. But you can’t get me to predict a number when there are so many variables going in.”

Asked whether the social impact of closing stores kept him awake at night, he scoffed that he only thought about such things during working hours and decisions on store closures were taken by a wider group of people. “I’m not sitting in my office stroking a white cat.”

Closer co-operation with Debenhams remains a prospect. “I told them to work together, they should work together,” he said. “Why on earth don’t House of Fraser and Debenhams do more together now? Say it was buying together – that’s very simple. Saves on logistics.”

Asked if this meant stores could end up closing in areas where there was an overlap, he said: “You’ll end up with just one [store] anyway if the market isn’t right.” – Copyright The Financial Times Limited 2018

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