Major pub chain boss says Labour’s national insurance tax grab will force the price of the pint to rise by 10p_Nhy
A major pub chain has warned that Labour’s national insurance hike will cause the price of its pints to increase.
Pub group Fuller’s has revealed a £3million hit from the Budget move to increase employers’ national insurance contributions and joined the growing list of firms warning over price increases to offset the impact.
Chiswick-based Fuller, Smith & Turner – which has 5,500 staff – said it would need to raise prices for customers across its hotels and pubs as it faces a significant cost increase.
Simon Emeny, chief executive of Fuller’s, said: ‘We won’t be able to afford to just take the £8 million hit to the bottom line, so there will be price increases and it will be inflationary.’
He said it was ‘too early’ to say what impact the Budget blow will have on its investment plans, but said others in the sector were reining in spending as a result, which will lead to some hospitality firms having to cut back on recruitment.
Simon Emeny, chief executive of Fuller’s, warned there will be price increases as it faces a significant cost increase
Rachel Reeves has increased NI contributions and lowered the threshold to include thousands of part time staff for the first time
Mr Emeny said the increase in pints across the industry ‘will be more than 10p’
But Mr Emeny added: ‘Our customers want a high level of service so it’s imperative we don’t compromise on that.’
When asked about how much the price of a pint will increase by, he told the Sun: ‘It won’t be as low as 5p.
‘The increase across the industry will be more than 10p.’
In last month’s Budget, Chancellor Rachel Reeves announced the employers’ rate of NI will increase by 1.2 percentage points, to 15 per cent from April.
In addition, the level at which employers become liable to pay NI on salaries will reduce from £9,100 to £5,000 per year.
And the minimum wage for over 21s, known officially as the National Living Wage, will rise from £11.44 to £12.21.
He added: ‘For a Government that was supposed to be stimulating economic growth, it will do the exact opposite.’
In the group’s half-year results out on Wednesday, Fuller’s chairman Michael Turner also took aim at the Chancellor over the tax hike.
He said: ‘The Chancellor’s actions are a direct attack on those labour-intensive industries that are the lifeblood of our economy, whilst leaving the large City institutions, that can afford to pay their share, almost completely untouched.
‘The unintended consequences of these actions will be to drive inflation higher, put pressure on wages, and will drive many businesses to the wall.’
In the group’s half-year results out on Wednesday, Fuller’s chairman Michael Turner also took aim at the Chancellor over the tax hike
Pictured: A general view of Fuller Smith & Turner in Chiswick
It comes after the likes of Sainsbury’s, Marks & Spencer and Asda have cautioned prices will probably need to rise to counter the extra costs.
Despite the Budget woes, Fuller’s – which runs around 370 venues across the UK – cheered a ‘very strong’ first half, with underlying pre-tax profits jumping 21% to £17.6 million in the six months to September 28.
Mr Emeny said a boost from pop star Taylor Swift’s sell-out concerts at Wembley over the summer helped drive sales at its hotels and pubs, with like-for-like growth of 5.5% for food, 4.9% for drink and 4.9% for accommodation over the first half.
With Oasis and Coldplay concerts lined up for next year, Mr Emeny said: ‘We expect an even stronger summer in 2025.’
It comes after a letter from Premier Inn, Slug & Lettuce and Fuller’s slammed abour’s ‘regressive’ plans – which will heap an extra £3.4bn on the sector.
They say hospitality is unfairly hit by changes and drastic consequences will include small businesses collapsing and job losses.
The letter called for an exemption for lower band taxpayers who work fewer than 20 hours per week to support venues who hire student bartenders and other flexible workers.
Signatories of the plea included Mr Emeny, Bob Ivell, chairman of Mitchells & Butlers, David McDowall, chief executive of Slug & Lettuce owner Stonegate Group and Dominic Paul, chief executive of Premier Inn owner Whitbread.
Beer casks stacked on a truck at the Fuller Smith and Turner Plc brewery. Industry bosses have warned that the Chancellor’s Budget will heap an extra £3.4bn on the hospitality sector
Bosses want a new employer band created from from £5,000 to £9,100 with a lower rate of 5pc or for lower band taxpayers who work less than 20 hours per week to be exempt (file photo)
Organised by trade group UKHospitality, the letter stressed: ‘The changes to the NICs threshold are not just unsustainable for our businesses, they are regressive in their impact on lower earners and will impact flexible working practices which many older workers and parents rely upon.
‘Unquestionably they will lead to business closures and job losses within a year.’
The letter was published a day after it was revealed Tesco, Britain’s largest supermarket and a major employer, would have to pay £1bn in extra costs after a nightmarish Budget for the High Street.
Mark Selby, chief executive and co-founder of Mexican restaurant chain Wahaca, who is backing UKHospitality’s letter, told The Mail: ‘It feels utterly unacceptable. Once again they seem to be hitting the very people who create the most work for the workers.’
Since the Budget, Mr Selby has been ‘inundated’ with emails from technology companies offering him services to replace human workers with.
Luke Johnson, who made his name growing Pizza Express in the 1990s and is now chair of Gail’s Bakery, last night said the policy was ‘certain to discourage investment, growth and job creation’.
Chief Secretary to the Treasury Darren Jones said the government was looking out for small businesses and working people.
When asked if larger firms should ‘suck it up’, he told the BBC: ‘There are measures more broadly in the budget which we think are good for business, and good for growth, and good for the economy.
‘But on tax contributions, yes, it’s been designed in that way.’
