BBC
Anthony Pender runs two pubs and a restaurant in London
The budget is “catastrophic” for the pub industry and will see the price of a pint rise by up to 40p, a pub boss has warned.
The combination of an increase in the amount employers pay in National Insurance and an increase in the minimum wage and business rates has sparked fury from the hospitality sector, with many saying they will have to increase the price.
Anthony Pender, owner of two pubs and a restaurant, told the BBC businesses were being “taxed to death”, while pub chain boss Fuller said the National Insurance hike was a “paralyzing hammer blow” for ads.
Chancellor Rachel Reeves said raising taxes on businesses was the right choice to fund public services, such as the NHS.
But even though she claimed not to have raised taxes on “workers,” some fear that the increases imposed on employers will end up hurting workers and consumers, through lower wage increases and higher prices.
Mr Pender, who employs 70 people at Yummy pubs in London, said the National Insurance hike alone would cost him £44,000 more a year, while his business rates would rise by £37,000 from of April due to reduced discounts.
“We are looking at an increase of 30 to 40 pence per pint due to the cost of employment,” he said.
“We all expected a tough time, we know tough decisions had to be made. But this is catastrophic, and it's catastrophic for small businesses.”
Mr Pender said if he passed on all the extra costs to customers he would charge £8 a pint in “two small high street pubs” – a move he said would not be sustainable.
In addition to raising prices, he said he would have to consider cutting costs, which could include reduced hours and possible layoffs.
The average price of a pint of draft lager in the UK was £4.47 in September, according to the Office for National Statistics, but the British Beer and Pub Association recently revealed that owners were making a profit of £12 pence per pint.
Louise Maclean of Signature Group, which has 20 pubs and bars across Scotland, said the tax rise would be passed on to food and drink prices to keep the business profitable.
“Yesterday's budget made us a loss-making company,” she told the BBC's Today programme, adding that Signature's staff costs would rise by £1.7m.
“We all knew employers' NI was going to rise and the national living wage was going to rise, but the cut in the threshold was a bit of a boost that we didn't see coming,” added Ms Maclean, who employs 740 people. people, many of whom work part-time and earn minimum wage.
“We don’t want to change our business, but we can’t go into the red either.”
“I’m just completely disappointed.”
Chancellor Rachel Reeves has decided that businesses will bear the brunt of her total £40bn tax rise by raising the national insurance rate and reducing the threshold at which employers start paying it, to generate £25 billion.
The rate employers pay will rise from 13.8% to 15% from April and the threshold at which they start paying tax on each employee's wages will be reduced from £9,100 a year to £5,000 £.
However, the Chancellor said she would extend Employment Allowance – the amount employers can claim on their National Insurance bill – from £5,000 to £10,500, although this would only benefit the most small businesses.
These measures have sparked backlash from businesses of all sizes.
Simon Emeny, chief executive of Fuller's, which owns around 400 pubs and hotels and employs almost 5,000 people, said he was “just completely disappointed” by the chancellor's choices.
He said they had a “disproportionate” impact on the hospitality industry, which is a big employer of young people and part-time workers.
He added that the specific decision to lower the threshold at which employers will have to pay national insurance was a “crippling hammer blow” to the sector.
Pubs and restaurants operate on tight margins – margins that have taken successive hits due to pandemic lockdowns, soaring energy prices and the cost of living that has customers spending less.
“The question is how much more can the consumer take? How much more before they say, 'do you know, going out is a luxury, we're not going to do it as much',” Ms Maclean said.
