‘IT is very hard. We are really obliged to wonder if this is viable, ”explains Dan Brod, who has spent the last 16 years building his small chain of pubs and luxury restaurants in the southwest of England.
From next weekend, the owner of the Beckford group, alongside Nearly a million other companieswill be struck by a handset 25 billion pounds sterling of national insurance contributions from the employer (NICS) While Rachel Reeves’ autumn budget measures come into force. With economic worsening, fear is that change will only make matters worse.
“My personal policy is slightly to the left of the center, but it seems strange that the government asks us to increase prices and employ fewer people. There is no other answer than that, ”explains Brod.
Last week at springThe Office of Budget Liability (OBR) said that the tax changes in reeves contributed to the drop in recruitment and the increase in layoffs. Coupled with an increase of 6.7% of the national decent salary from Tuesday to £ 12.21 an hour for the 21 years and over, the The Bank of England also warned Employers are freezing job plans.
The Chancellor maintains that money is seriously necessary to fill a deficit in government finances left by the conservatives – the aggravated position by skyrocketing borrowing costs and in low economic perspectives – while providing enough money to repair the beaten public services of Great Britain. Its detractors, however, say that employment of employment could be a counterproductive solution.
“It was a cardinal error. I understand thought, but it is a case of politics that goes beyond the economy, ”explains Charlie Bean, former member of the board of directors and former governor of the Bank of England.
“There has been enough decline in business and it becomes clear what are the negative effects. But any chance of turnover? From an economic point of view that would be reasonable and increase the money elsewhere. ”
Bean would have preferred an increase in income tax, employees or VAT. Reeves, however, tried this to help work to go through a victory in the overwhelming general elections last July.
From April 6, the rate of the NIC of the employer will drop from 13.8% to 15%, under Plans announced by Reeves last October. The threshold for the tax deducted will also be reduced from £ 9,100 to £ 5,000 per year, in a part of the plan that business leaders warn temporary and poorly paid jobs.
While 250,000 employers will benefit from a tax compensation, up to 940,000 – including the main street retailers, small businesses, care providers, charitable organizations and advice – will lose, according to HMRC.
In addition to its appearance on layoffs, business leaders warn that their profits will be affected, the salary increases for staff will be less generous and they will be forced to pass on the highest costs of employment to customers – threatening to add to already bubbling inflationary pressures.
Hospitality, leisure and retail will be particularly affected, largely because these sectors will employ more paid workers and temporary staff, where the reduction in the Nica threshold will have the greatest impact. “This is the most regressive change in tax that I have seen in 30 years of hospitality,” explains Kate Nicholls, Director General of Ukhospitious. “The government highlights difficult choices, but it denies that difficult choices are made by companies on this subject.”
Mike Gavin, director of Arc Hospitality Recruitment, an agency based in Merseyside specializing in hospitality, hires 9,000 workers each year. These include servers, bar staff, chefs and cooking carriers for Premier League football clubs, including Liverpool, Everton, Manchester United and Arsenal.
“We will probably see an effective double of our employer or Bill,” he says. His business has moved offices to save money and negotiates with customers to divide the cost. “It descends into the thread until we arrived in April. There will be a financial impact and it will not be insignificant. ”
Reeves faced commercial complaints by contesting his opponents for alternative ideas. The conservatives and the Liberal Democrats sought to qualify the changes of “employment tax”. But the chancellor told municipalities last week: “They cannot oppose tax increases and support the money we have invested in our public services. To say the opposite, I fear it, these are fairy tales and the Magic Money Tree – it simply does not add up. ”
Part of the work plan is likely to be based on the idea that the British economy for too long has been fueled by a little paid and unsafe work. The ministers advance with the greatest upheaval of workers’ rights In decades, to the dismay of many groups of companies that say that it only adds to their costs and will reach more hiring.
But some experts say that changes will encourage employers to invest in technology, rather than resorting to poorly paid and unqualified work. The fashion retailer then says that he does not plan to cut jobs, but Use more mechanization In warehouses and stores to compensate for the increase in costs. Greggs says that an increasing resistant salary will put More money in customer pockets To spend on its sausage rolls and pastries. Meanwhile, Andy Haldane, the former chief economist of the Bank of England, believes that the budget of Reeves was “pro-growth” because Public services financing Provides employers with a healthier, better educated and more mobile workforce. “You cannot have it in both directions. If you want to create the right trade environment, you need to invest in these things, and that forces us to pay these things,” he said Tutor Last year.
Official job market data also shows Employment holds much better than the business world does not suggest – confuse The fastest pace of job loss since the 2008 financial crisisExcluding the pandemic.
Even with reliability problems with employment figures, other data – including for vacant positions and information on HMRC payroll – suggests that industry has too unfaithful the extent of the problem.
It is useful that the policy presents itself in a tight market of jobs, the growth of wages operating among the highest rates for decades, because many employers have trouble finding staff in the middle of the loss of work of the EU easily available after Brexit, and Authorization of adults of the working age leaving the job market Due to poor health.
A sudden stop, however, has never been really on the cards. Companies have experienced the increase in NAnds on April 6 in the last five months and distribute their response over time; A slow puncture effect is more likely.
However, vacation rates fall more quickly in hospitality than for other industries, while business leaders say that tax changes will know the main objective of work: the growth of the economy.
“He overturned business confidence and made more difficult for companies to hire, invest and grow,” explains Louise Hellem, chief economist at the CBI. “Companies are downright behind the growth mission of this government and want them to succeed. But it is the ability for companies to invest that will decide whether or not we are growing up. They need an increase in confidence. ”
Growth has come closer to stagnation in recent months; with zero progress In the third quarter of last year and a number of 0.1% in the last three months of 2024. Things have not improved much: the economy decreased by 0.1% in January.
Nick Mackenzie, Managing Director of Greene King, says that tax changes will make the return more difficult. “The government should not in any doubt that the hike of the cost of business causes a revaluation of decisions concerning investment, prices and hiring.”
As an operator of one of the country’s largest advertising channels, employing 40,000 employees, Mackenzie would normally spend around 200 million pounds sterling each year for his succession of 2,600 pubs, restaurants and hotels. However – as with many operators – less could be devoted to renovation projects, new bars and garden refusals in the future.
Some advertising operators firmly take place earlier during the week to reduce costs. Shepherd Neame, the oldest brewer in the United Kingdom, is prizeWhile the British Beer and Pub Association blames tax increases for the national average price of a pint Strike £ 5. “We want to be able to invest more and maintain low prices, but the government must reduce these costs in a spiral to allow us to do so,” explains Mackenzie.
The suffocation of recruitment in hospitality could also strike another of the most important priorities in the government: to put more people at work. Ministers want to reach an employment rate of 80%, compared to 75% at present, emphasizing aid to young adults and those who suffer from health problems in particular.
Young unemployment has increased sharply, with the number of 16 to 24 years Not in employment, education or training (neet) at almost a millionThe highest level for more than a decade. The reductions in the Spring of Reeves declaration services were also justified by the argument that they would help more people find work.
Nicholls claims that tax changes will grant progress. “Unfortunately, the cost of creating new roles has increased considerably. Employers are much less likely to take a risk for someone who may not be able to work full time – these are the opportunities that will be reduced first. ”
Bean agrees. “It is unlikely that a person in disability is transferred directly to an intermediate management job in a large company or something. It is likely to opt for more flexible and entry -level jobs. It is particularly myopic. “
With more than 240 employees in its restaurants in Bath and shop pubs in the Rural Somerset and Wiltshire, Brod says that he puts his hiring plans on the ice. Already barely a profit, salary costs increasing 40% of turnover, he says that price increases are difficult when consumers have been extended by the cost of living crisis – which means that his job and investment plans will take up.
“Not everyone can become an AI programmer. All our young employees, looking for a first job, cannot work in technology or engineering. A, these jobs do not yet exist, and B, we are not going to suddenly build lots of factories.
“The index should be in the name:” Labor “. It seems to be anti-work, which is a really strange thing for me. I can see why they did it, but I don’t think it’s the right thing to do. ”