Founder Sir Tim Martin highlighted that rising costs from National Insurance (NI) and national living wage hikes are putting substantial pressure on the hospitality sector, prompting many pub businesses to consider price increases.
Martin explained that while cost inflation had initially eased after peaking in 2022, the Budget’s recent tax measures have driven costs up sharply again. The Budget includes a 1.2 percentage point increase in employers’ NI contributions, pushing them to 15%, and lowers the NI threshold. Additionally, while alcohol duties have increased with inflation, draught drinks received a modest 1.75% cut, a measure which Tim Dewey, CEO of Yorkshire brewer Timothy Taylor’s, described as “irrelevant” in offsetting the new tax pressures on pubs.
Wetherspoon reported a 5.9% rise in like-for-like sales over the last 14 weeks, driven by increases in bar, food, and slot machine sales, although hotel room bookings dipped by 2%. Shares in Wetherspoon rose by more than 2% in early Wednesday trading, with Martin expressing cautious optimism about the year ahead, though he acknowledged the difficulty in forecasting due to rising operational costs.
Industry group UKHospitality, representing pubs, restaurants, and cafes, estimates that the NI changes will add a collective £1 billion to tax bills across the sector, raising concerns about the broader impact on pub-goers and the hospitality industry’s stability amidst the new financial pressures.
Jamie Young
Jamie Young is Senior Reporter at Business Matters, covering SME finance, employment law and Westminster policy since 2016. He has reported on every Budget and Autumn Statement since 2018, helped make sense of the 'covid era' and the bounce-back loan scheme from launch through the fraud investigations, and broke the magazine's coverage of the 2024 late-payment reforms. He joined Business Matters straight from completing his BA in Administration from Exeter University and is NCTJ-qualified. Reach him at jyoung@cbmeg.co.uk
