The chair of London pub operator Fuller, Smith & Turner today lashed out at the Chancellor’s National Insurance reforms warning they will inflict “particular pain” on the hospitality sector while leaving big City firms “almost completely untouched.”
Michael Turner, a descendent of one of the three founding families of the Chiswick based company, said the “unintended consequences” of Rachel Reeves’s raid on employers will be “ to drive inflation higher, put pressure on wages, and will drive many businesses to the wall.”
He is the latest in a string of company bosses to express their anger at the massive hike in employers’ NI, which will be load a particularly tough burden on sectors hospitality and retail sectors. Last week M&S said its NI bill will go up by £60 million and Sainsbury’s will have to shoulder an extra £140 million of costs.
The Chancellor revealed last month that the employers’ NI rate will go up from 13.8% to 15% from next April while the threshold will fall from £9,100 to £5,000. The changes will raise £25 billion to close the so called “black hole” in the national finances.
Mr Turner spoke out as the company revealed strong first half figures with underlying pre-tax profit up 21% to £217.6 million in the six months to 26 September and Christmas bookings up by 15% on last year.
He continued: ”The Chancellor’s recent budget gave me cause to reflect that, over the years, we have seen our wonderful industry plundered for an ever-increasing amount of tax - and once again, history has repeated itself.
“While other sectors replace human interaction with automated systems, hospitality continues to provide an introduction to the working environment not just for future publicans and hoteliers - but also the business leaders and, indeed, politicians of tomorrow.
“The changes to Employers’ National Insurance, coming on top of the cumulative impact of other wage and business rate increases, will cause particular pain, and has been brought about by the Chancellor’s inadvisable promise not to increase taxes on individuals.
“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.
He added:”I hope the Government will reflect on its decisions and appreciate the incredible contribution hospitality, farming, and small businesses make to so much more than just the Treasury coffers.”
Fuller’s runs around 400 pubs, half in London and employs around 5,500 people. Its costs will go up by around £8 million next year as a result of the NI increases and the hike in the national living wage.
Chief executive Simon Emeny also said he was “pretty horrified by the Budget” adding “its hard to see how putting up taxes that disproportionately affect retail and hospitality will encourage growth. He said companies like Fuller’s that employ large number of part-time staff and students on relatively modest pay will be hit hardest. He said the NI bill for someone paid around £20,000 will go up more than 70% next year while for an employee earning more than £100,000 “the increase won’t touch the sides.”
