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 restaurants. large in the United Kingdom. pub and hotel businesses.
The letter – with signatories including Premier Inn owner Whitbread and restaurant and drinks group Mitchells & Butlers – comes as reports suggest Tesco will face an extra £1 billion in costs over the course of the current parliament as a result of the rise in the national number of employers. insurance contributions (NIC).
The annual bill for the supermarket chain, which has 300,000 staff in the UK and is the country’s biggest private employer, would be £250m, according to analysis by US bank Morgan Stanley, which was first reported by Sunday Times.
Hospitality businesses are warning the sector will be hit with an extra £3.4bn in costs as a result of the budget changes, according to the letter to Rachel Reeves, signed by company bosses including pub operator Fuller’s and owner Stonegate Group. of the Slug & Lettuce chain, as well as Whitbread and Mitchells & Butlers, who are all on the board of UK trade body Hospitality.
The signatories warn that this will cause “unprecedented damage” to the sector and force them to raise prices from 6% to 8%, although they say customers are unable to pay more.
“Changes to the NIC threshold are not only unsustainable for our businesses, they are regressive in their impact on lower earners and will affect the flexible working practices that many workers and parents rely on. elderly”, says the letter.
“Without a doubt, they will lead to business closures and job losses within a year.”
In addition, executives warn that the changes will cause some businesses to reconsider their investment plans, while others will reduce hours for staff members and contract catering firms will “struggle” to meet their contracts. public sector food supply for schools, hospitals and prisons.
The government expects to raise £25 billion a year from changes to national insurance, making it the biggest single tax increase in the budget.
Hospitality businesses warn that they have been disproportionately affected by changes in the October budget to employment costs. Lowering the threshold at which employer NICs are payable to £5,000 will affect thousands of part-time staff for the first time.
The letter adds: “The threshold change brings many team members into employers’ NICs for the first time. We estimate that the threshold change could be four times the cost of the new total rate.”
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Signatories to the letter – which also include bosses of drinks 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 NIC band for those earning £5,000 to £9,100, which would have a lower rate of 5%, rather than 15%, or introduce an exemption for generational taxpayers lower working less. than 20 hours a 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 for their businesses and warned of possible price rises.
Sainsbury’s said it will have to pay £140m more in NIC next year, which is likely to lead to price inflation, while Asda put its cost at £100m and Marks & Spencer said it would have to pay £60m more next year.