Price of a pint to rise by 20p warns major pub chain boss after Budget tax raid
CUSTOMERS of a major pub chain face paying 20p more for a pint following the Government’s Autumn Budget.
Simon Dodd, chief executive of Young’s, said the chain plans to hike its prices by between 2.5% and 3% because of increased costs.
Employer National Insurance contributions (NICs) are being increased from April this year, meaning bosses will have to pay more in tax on workers’ pay.
A host of retailers and hospitality chains are now warning they will have to pass these additional costs on to shoppers and customers.
Mr Dodd said the upcoming NIC hike will add around 20p to the cost of a pint sold at £6.30 in London to £6.50.
Mr Dodd said: “We’ll mitigate as much as we can of the NI contribution – we’ll do that through efficiency, we’ll do that through investing in our pubs.
“But there will be some price passed on to the consumer.”
He added that any price rises would be “sensible” so as not to lose too many customers.
“I’m not going to say anything about the Government, because they have a tough job – although it’s not helpful.”
Mr Dodd’s comments came after Young’s posted strong sales over the festive period, with like-for-like sales across December 24, 25 and 26 up 10.5% from the year before.
Total managed revenue for the 15 weeks up to January 13 increased 26.1% and 7.9% on a like-for-like basis.
PUB CHAIN PRICE WARNINGS
Young’s, which runs pubs mostly in London and the South East of England, is one of a number of hospitality chains warning of price hikes later this year due to the Government’s tax raid.
All Bar One owner Mitchells & Butlers (M&B) told The Sun last year the price of its pints could rise by between 10p and 15p.
The group, which also owns Toby Carvery, said higher wage expenses were “by far the most significant increase” in its cost base following moves announced in the Autumn Budget.
Chief executive Phil Urban said M&B was facing around £23million a year in extra costs from the rise in NICs alone, with the increase in the minimum wage also sending its wage bill surging.
In November, chief executive of pub chain Fuller’s, Simon Emeny, told The Sun the price of beers at its hotels and boozers would likely be hiked by 10p.
The boss of the brewing giant slammed the decision to hike NICs as “counter productive to growth” and “hurting young employment“.
Wetherspoons boss Tim Martin has also cautioned that additional costs piled onto businesses could be passed on to paying customers.
The pub chairman said the chain would aim to stay competitive on costs for customers but that all hospitality businesses faced the same pressures.
Mr Martin said: “Cost inflation, which had surged to high levels in 2022, gradually diminished over the subsequent two years.
“However, it has now significantly increased again following the budget.
“All hospitality businesses, we believe, plan to increase prices, as a result.”
A host of retailers are saying they will have to raise prices too.
Fashion giant Next said it will have to raise prices by 1% following the Government’s announcement on NICs.
It also said it would be introducing self-service checkouts in a bid to cut staffing costs.
Boss of the UK’s favourite bakery chain Greggs Roisin Currie said last week it had already upped prices on some of its menu items, including sausage rolls.
In other pubs news, boozers helped the economy eke out growth in November as GDP figures published by the Office for National Statistics (ONS) revealed the service sector grew by 0.1%.
Liz McKeown at the Office for National Statistics said the services sector was the biggest contributor to growth in the month.
What is National Insurance?
NATIONAL Insurance is a tax on your earnings, or profits if you're self-employed.
These contributions make you eligible for things like the state pension and certain benefits.
You’ll usually pay National Insurance Contributions (NICs) when you’re over the age of 16 and earning a certain amount.
For example, if you earn £1,000 a week, you pay nothing on the first £242.
Earn over that and you pay 10% on the next £725 – so £72.50. Then you pay 2%o on the rest, so £33, which works out as 66p.
For the self-employed rates are slightly different.
You can also get something known as National Insurance in some circumstances when you’re not working, for example when you have kids and claim certain benefits.
NICs are usually taken automatically by your employer and paid to HMRC, so you don’t need to do anything.
You can see how much NICs you pay on your wage slip.
Anyone working for themselves usually has to pay NICs themselves when completing a self-assessment tax return.
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