Hundreds of hospitality sector bosses have warned a hike to employer national insurance contributions (NICs) will “unquestionably” prompt business failures and job losses.
Whitbread PLC and JD Wetherspoon PLC joined over 200 firms from across the industry in signing an open letter calling on Chancellor Rachel Reeves to rethink the measures.
“Changes [...] are not just unsustainable for our businesses, they are regressive in their impact on lower earners and will impact flexible working practices,” the letter read.
“Unquestionably, they will lead to business closures and job losses within a year.”
Reeves unveiled the increase in last month’s Budget, which will see employer NICs lifted from 13.8% to 15% and the threshold at which these are paid cut from £9,100 to £5,000.
“The increase in employer contributions would have been damaging enough,” the letter, which was also signed by Mitchells & Butlers PLC, Marston’s PLC and Holiday Inn parent IHG, continued, “but changing the threshold is worse”.
This was set to see NIC levels rise by 74.5% for minimum wage workers, against 13.6% on salaries of £100,000, the industry forecast, leaving many lower-paying jobs “unviable”.
“There is no capacity to pass the costs onto customers,” it added, noting this would see prices increased by 6% to 8% when “customers are at the end of their ability to pay more”.
“Without action, many businesses will be forced to reconsider their growth plans, and many smaller venues may be at risk of closure.”
J Sainsbury PLC, Asda and Marks and Spencer Group PLC have all previously warned of a surge in costs on the back of the NIC hike, signalling it would lead to higher prices.
Reeves had said the changes would generate £25 billion to fund the likes of public services, including the NHS.