The increase in employer National Insurance contribution (NICs) announced by Chancellor Rachel Reeves in her Budget last month, will place a “significant burden” on brewer, pub and hotel owner, Daniel Thwaites, the company has said.
The Lancashire-headquartered group added that the increase, together with the rise in the National Living Wage, “make it less attractive to employ people and will reduce investment”.
Thwaites added that the tax rises will hit “working people through either lower pay awards or reduced employment”.
In a half year report the company said that “since the summer there has been a marked decline in confidence, both for consumers and businesses. This has been particularly noticeable in its hotels business which has experienced a slowing in sales.”
“One of the factors at play has been the intense speculation in relation to the new government’s first budget; now this has been delivered it has removed some of the uncertainty. With the measures announced, it is disappointing that already the chancellor has indicated that additional tax rises will be needed in her future budgets to meet the government’s spending plans.”
“Consumer prices inflation is currently running at about 1.7%, so it was extremely disappointing that the government has decided to increase the national living wage by 6.7% and the young person’s rate by 16%, which disproportionately affects hospitality.”
“In addition, the increase in employers National Insurance contributions, through both an increase in the rate, and lowering the threshold at which it is paid adds a significant burden on the Company.”
“There is limited scope for price increases in the current economic environment, so collectively these policies force us to think differently to consider ways to mitigate these taxes. They make it less attractive to employ people and will reduce investment. Ultimately, they will be borne by working people through either lower pay awards or reduced employment.”
“Despite intense lobbying, the government has also reduced business rates relief for hospitality from 75% to 40%, which has been a lifeline for pubs that are already overtaxed, which for some will be the final straw. The much vaunted reduction in the price of a pint by 1p is irrelevant against the context of these new measures.”
“These changes will come in from the start of our next financial year, and whilst the profitability of the Company is currently holding up, significant and unwelcome new headwinds have been introduced.”
The group, which has 200 tenanted pubs and hotels across Cumbria, the Midlands, North Wales and Yorkshire, has also revealed its turnover increased from £60.3m to £63.5m in the six months to 30 September, 2024, compared to the same period in 2023. However, its pre-tax profit dipped from £8.5m to £7.6m.
In its latest full-year, Thwaites achieved a turnover of £115.5m and a pre-tax profit of £9.1m.
