Your browser is no longer supported. For the best experience of this website, please upgrade to a newer version or another browser.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

Mulberry: Give us a tax break

Punishing UK tax rates are effectively blocking luxury British brand Mulberry from opening a new factory in the country, chief executive Godfrey Davis has claimed.

Punishing UK tax rates are effectively blocking luxury British brand Mulberry from opening a new factory in the country, chief executive Godfrey Davis has claimed.

Davis told Drapers he was considering opening a second factory in the UK next year due to a spike in demand for its bags, but had been put off from doing so by the impact rising National Insurance (NI) rates have on operating costs. Employer NI contributions are set to rise to 13.8% from 12.8% for those earning more than £136 a week in April.

“We would love to make more in the UK but over the past 10 years the political and economic climate has not been conducive to investing in the UK,” Davis said. “We have been investing in things like apprenticeship schemes [to encourage younger staff into the business], but that’s more because we’ve been bloody minded.”

Davis’s complaint echoes that of many other British manufacturers that have backed Drapers’ SOS campaign, which launched earlier this month.

Mulberry, which showed at LFW this week, is increasing capacity by 30% at its existing UK factory in Somerset, and needs to open another factory next year to meet growing demand for its It bags. Last year the company, which has production bases in Spain and Turkey, doubled its production of handbags, partly thanks to the success of the Roxanne and Alexa styles.

Davis called on the Government to introduce “NI holidays” for manufacturers looking to set up in this country, and said this sort of ongoing tax break would act as more of an incentive to cash-rich British fashion brands than traditional ‘golden handshakes’ used to attract manufacturers from overseas.

“Many British [fashion] companies are already well-funded so we look at the operational costs of running a business [when making a decision about where to base our factories],” he said. “A constructive approach would be to give some sort of tax break to encourage [businesses] to relocate. An employer NI holiday for a number of years [would work] and UK plc would benefit because we would be creating more employment.”

“When we make anything, it takes a certain number of minutes to make it. It’s the cost per minute that’s important. If NI is put up to 14%, every minute we are paying 14% [of staff wages] to the Government in tax.”

Drapers intends to take a dossier of evidence to its meeting with Ed Vaizey about how a skills shortage is impending manufacturing growth. Comment on this article with your experiences or email them to katherine.rushton@emap.com with SOS in the subject line.

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions. Links may be included in your comments but HTML is not permitted.