“From a financial point of view, last year’s budget was worse for hospitality than Covid,” says Philip Thorley, who owns 18 pubs across Kent and employs about 400 people.
Usually he is looking to recruit staff to help out in the summer months but this year will be different, he says, as the £25bn increase in employers’ national insurance contributions (NICs) that came into force in April has been “catastrophic for our company and industry”.
He says the fact that Thorley Taverns is now taxed at about £8,000 a week, totalling more than £400,000 a year, means it cannot afford to take on anybody new during busier months. Current staff will have to work harder, Thorley adds, and the extra pressure could affect customer service levels and opening times.
“This affects anybody in retail, in the high street and other entry-level jobs, especially young people,” he says.
After the chancellor, Rachel Reeves, announced the NICs rise in October, business groups argued that they would hit hiring and retention. On Thursday signs of that impact emerged: the latest official jobs data showed that unemployment climbed and wage growth slowed in the three months to May.
The trade body for the hospitality sector said data showed it had been the hardest-hit sector since the budget, accounting for 45% of all job losses. The chair of UKHospitality, Kate Nicholls, said: “The change to employer NICs in particular, was socially regressive and had a disproportionate impact on entry level jobs.”
Cliff Nicholls, who runs two trampoline parks in Tamworth and Bolton, says his business rates are 240% over what they paid last year, resulting in him cutting about 14 jobs.
Due to high business rates increasing energy costs, Cliff has reduced opening hours, which is what he says is affecting his business the most.
Jump Xtreme was open seven days a week all year round, but it has now had to close two days a week during term-time to save on bills.
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The trampoline parks are in large buildings, which use more energy than most other local businesses, Cliff says. “Wholesale energy costs, which are largely outside government control, have gone up by 100% in the last four years,” he adds.
“I’m hopeful, because the government indicated business rates will be reviewed in the next budget, but I’m not holding my breath given the government’s track record.”