Hospitality businesses will be forced to close, while others will have to cut jobs and investment as a result of changes to National Insurance announced in the Budget, according to a letter to the Chancellor signed by the bosses of more than 200 of the country’s biggest restaurants the United Kingdom. café and hotel businesses.
The letter – with signatories including Premier Inn owner Whitbread and pub and restaurant group Mitchells & Butlers – comes after reports suggested Tesco could face an additional £1 billion in costs over the course of the current parliament as a result of the increase in national employer contributions. insurance premiums (NICs).
The annual bill for the supermarket chain, which has 300,000 British staff and is the country’s largest private employer, would be £250 million, according to an analysis by US bank Morgan Stanley, first reported by the Sunday Times.
Hospitality companies are warning that the sector will be hit by a further £3.4 billion in costs as a result of the budget changes, according to the letter to Rachel Reeves, signed by bosses of companies including pub operator Fuller’s and Stonegate Group, owner of the Slug & Lettuce chain, as well as Whitbread and Mitchells & Butlers, all of which are members of the board of trade body UK Hospitality.
The signatories warn this will cause “unprecedented damage” to the sector and force them to raise prices by 6% to 8%, although they say customers will not be able to pay more.
“The changes to the NIC threshold are not only unsustainable for our businesses, they also have a regressive impact on lower income earners and will impact flexible working practices that many older workers and parents rely on,” the letter said.
“They will undoubtedly lead to business closures and job losses within a year.”
In addition, leaders warn that the changes will cause some companies to reconsider their investment plans, while others will cut staff hours, and that contract catering companies will “struggle” to fulfill public sector catering contracts for schools, hospitals and prisons .
The government expects to raise £25 billion a year from the changes to national insurance, making it the biggest tax increase measure in the budget.
Hospitality companies warn that they will be disproportionately affected by changes in the October labor costs budget. The reduction in the threshold at which employer NICs are paid to £5,000 will affect thousands of part-time workers for the first time.
The letter adds: “The threshold change brings many team members into employer NICs for the first time. We estimate that the change in the threshold could be four times the cost of the new nominal rate.”
The letter’s signatories – which also include bosses of pub chain Greene King, Wagamama owner The Restaurant Group and pub group Marston’s – are calling on Rachel Reeves to “consider measures to protect businesses that employ lower earners”.
They are asking the government to create a new range of NICs for those earning £5,000 to £9,100, with a lower rate of 5% instead of 15%, or introduce an exemption for lower-income taxpayers bandwidth that works less. than 20 hours per week.
The warning from pub, restaurant and hotel operators comes after major retailers including Asda, Sainsbury’s and Marks & Spencer shared their calculations of the annual cost of the budget measures to their businesses and warned of possible price rises.
Sainsbury’s said it would have to pay £140 million more in NICs next year, likely to lead to price inflation, while Asda estimated its own costs at £100 million, and Marks & Spencer said it would have to pay £60 million more next year .