Rachel Reeves’ tax raid threatens to turn high streets into ‘ghost towns’ for much of the week as pubs, restaurants and shops prepare to close earlier and open on fewer days.
Retail and hospitality chiefs said they were actively looking at limiting opening hours in response to Ms Reeves’ decision to increase employers’ national insurance contributions.
It raises fears that the budget will worsen problems for Britain’s high streets and leave city centers largely closed outside the busiest shopping days of the week.
Luke Johnson, the chairman of bakery chain Gail’s, said Ms Reeves’ decision to raise the cost of doing business “only adds to the decline of town and city centres”.
The Night Time Industries Association (NTIA), which represents bars and clubs, warned that four in 10 members were at risk of closing within six months.
Michael Kill, chief executive of the industry group, said: “The Autumn Budget has effectively signed a death warrant for many businesses in the UK’s night-time economy. This sector is being pushed to the brink.”
Andrew Goodacre, chief executive of the British Independent Retailers Association, which collectively represents 8,500 stores across the country, said: “Our members have already told us they will be forced to reduce staff hours, reduce employee numbers and reduce trading hours .
“In short, the budget has made the revitalization of the high street, a key mission for this government, much more difficult.”
Labor pledged in its manifesto to ‘revive’ the high street and suggested it would shake up the property tax system to help support small retailers.
However, Andrew Griffith, the shadow business secretary, said: “After criticizing consumer confidence last summer, Labour’s tax rise budget means the only way hospitality businesses can balance their books is through reduced hours, reduced staff or both.
“That will leave our high streets like ghost towns many nights of the week. It’s only been a few months, but under Labor the lights are literally going out.”
The chancellor last month announced an increase in national insurance contributions paid by employers from 13.8% to 15%, and also lowered the threshold at which companies become liable to pay tax.
Ms Reeves separately increased the national minimum wage from £11.44 to £12.21 per hour. All changes will come into effect in April next year.
Hospitality and retail industry chiefs have argued that the changes will have a disproportionate impact on their businesses, which employ large numbers of low-wage workers. Bosses claim that these roles are often many people’s first jobs and provide valuable work experience.
Both retail and catering companies are also dependent on an army of part-time workers. The reduction in the national insurance threshold means that many part-time workers will now cause a tax bill for employers for the first time.
UKHospitality, which represents pubs, restaurants and bars, has warned that the sector faces £3.4 billion in additional employment costs as a result of the Chancellor’s policies. Industry leaders warned in a letter to Ms Reeves this weekend that many companies were being forced to scrap their investment plans and consider price rises, job cuts or closures.
For businesses that remain open, many are considering reducing their hours by opening shorter hours during the day or staying closed more days of the week.
Kate Nicholls, the chief executive of UKHospitality, said the Budget “will see venues consider reducing their opening hours or even closing on more days, to control rising staff costs.”
Alan Morgan, the CEO of one of Britain’s largest restaurant groups, Big Table Group, said he was considering limiting opening hours.
Mr Morgan told The Telegraph: “Nothing is out of scope at this time as the damage caused by the changes to National Insurance will be significant.”
He said options being considered include shorter operating hours and a reduction in staff, as well as price increases. Big Table Group owns the Bella Italia, Cafe Rouge and Las Iguanas chains, among others, and has more than 220 restaurants in the United Kingdom.
The British Institute of Innkeeping, which represents the pub sector, said more than 40 percent of its members plan to reduce their trading hours in response to the budget. Three-quarters plan to limit staff hours, which would mean fewer people working at any time.
Ms Nicholls warned that the Budget “puts full-time, full-service high streets and the investment in them at risk”.
Clive Black, analyst at Shore Capital, said the extra costs would “undoubtedly be a blow to high streets and shopping centres”.
He added: “Many shops are already closing on Monday. I wouldn’t be surprised if owners are also looking at other demonstrably quiet times, for example Tuesday.”
Billions of pounds have been wiped off the value of major employers’ shares since the budget, amid concerns over looming cost rises. Retail and hospitality are the first and third largest employers in Britain.
The NTIA said “relentless cost increases” meant that 40% of businesses in the night-time economy would have to close within the next six months without urgent support. The group represents bars, pubs and clubs with late opening hours.
Members are in “serious danger” as a result of the budget, NTIA warned.
Mr Kill, the group’s head, said: “The government’s ‘pro-growth’ claims ring hollow in the face of policies that in reality are crippling the very industries that drive economic vitality, social cohesion and cultural wealth. ”
Three-quarters of late-night venues expect their running costs to rise by more than £30,000 this year, with taxes playing a major role in the jump.
The Chancellor has defended her decision to increase taxes on companies by insisting that “difficult decisions” must be taken to get the public finances in order.
This was said by a spokesperson for the Ministry of Finance. “With our public services crumbling and a £22 billion budget black hole inherited from the previous government, we have had to make tough choices to rebuild the country’s foundations and restore much-needed economic stability to help businesses thrive.
“More than half of employers will see a reduction or no change in their national insurance bills, and to support the hospitality industry, we are permanently reducing business rates for every high street store from 2026, in addition to a 40% cut on business rates. for thousands of properties next year.
“This government is determined to deliver economic growth by boosting investment and rebuilding Britain.”
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