Leading pub and restaurant bosses have warned the Chancellor that tax rises announced in last month's Budget will “unquestionably” lead to closures and job losses.
In a letter, more than 200 signatories said the hospitality sector was being disproportionately affected by an “unsustainable” increase in the amount employers pay in National Insurance Contributions (NICs).
He adds that businesses have “no ability to pass costs on to customers,” which would instead lead to job cuts and the closure of small businesses.
Chancellor Rachel Reeves said her changes to national insurance for businesses would generate £25 billion, helping to fund public services, such as the NHS.
From April, the rate employers pay for National Insurance will increase from 13.8% to 15%, and the threshold at which they start paying tax on each employee's wages will be reduced from £9,100 per year to £5,000.
Signatories to the letter include UKHospitality chief executive Kate Nicholls, bosses of pub companies Fuller's and Stonegate Group, and Premier Inn owner Whitbread.
They are supported by 209 other companies, together employing tens of thousands of people across the UK.
According to the letter, cost increases will cause companies to reconsider their investment plans, jobs will be “significantly” eliminated and working hours will be reduced.
The signatories therefore demand measures aimed at “protecting companies which employ low-income employees”.
The letter also suggests that changes to the NIC threshold are “regressive in their impact on low incomes and will impact on the flexible working practices that many older workers and parents rely on”.
It calls on the government to consider one of two measures to mitigate the impact on businesses, admitting that they carry “an immediate financial cost” but that “lost growth potential” due to inaction ” would be considerably more expensive.
Suggested measures are a new NIC band for employers which would apply between £5,000 and £9,100 at a lower rate of 5%, or the implementation of an exemption for taxpayers working less than 20 hours a day. week.
However, the changes planned in the Budget are expected to raise some £25 billion a year, making it one of the largest tax rise measures in history.
The chancellor has previously said she was not immune to “criticism” over the move, but claimed it would put public finances on “solid footing”.
