Following Labour’s October Budget of Broken Promises and March’s Emergency Budget, pubs are having to make difficult decisions as the cost of Rachel Reeves begins to bite. The combination of her Jobs Tax, Minimum Wage hikes and ending hospitality relief could see pubs facing an extra £21,000 in staffing and tax costs.
Graham Stuart, MP for Beverley and Holderness, puts the blame squarely at Rachel Reeves’ feet for the uncertainty felt by pubs across the country as the busy summer season approaches. The long-serving MP has called for Reeves to be sacked.
The typical pub could see their employment costs alone rise by £13,500 meaning that, for many businesses, the only way to stay afloat is to let employees go. With this trend occurring across not only hospitality but in all sectors, the Office for Budget Responsibility has predicted the unemployment rate to rise to 4.5% in the coming year.
Labour has hiked National Insurance Contributions for Employers by 1.2% but, even more concerningly for East Yorkshire pubs, it has reduced the limit on which the Jobs Tax is paid from £9,000 to £5,000. The threshold had been designed to make part time work more attractive – meaning around 60% of all hospitality workers are part-time.
In addition to imposing these new costs on landlords, the Minimum Wage has been increased to £12.21 for over-21s and £10 for 18–20-year-olds puts a huge burden on businesses, especially for pubs which give teenagers an opportunity at a first job.
The increase in Employer National Insurance Contributions is enough to mean a typical pub employing six part-time workers could be forced to let two of them go.
Reeves chose to end hospitality relief for hospitality businesses, leading to the British Beer and Pub Association warning that the price of a pint may have to rise by 21p. Pubs in Beverley and Holderness face an average increase in their rates of £7,500.
Graham said, “Without our pubs, small villages in Beverley and Holderness will lose an important part of the community.
“We’ll lose places to meet friends, places to eat and places for our children to get their first jobs.
“Make no bones about it: Rachel Reeves will be personally responsible for decimating part-time employment through her jobs tax.
“Rather than penalising pubs, Rachel Reeves and the Labour government should be encouraging pubs by reducing the cost of employment and extending hospitality rates relief.
“I’ll do all I can to support pubs, and I hope Keir Starmer sees sense, sacks Rachel Reeves and brings in a Chancellor who encourages businesses like pubs.”
