According to The Sunday Times, some jobs on the minimum wage will become unviable as a result of the new threshold announced at last week's Budget
09:59, 11 Nov 2024Updated 11:37, 11 Nov 2024
Hospitality leaders have slammed the alterations to National Insurance as "regressive in their impact on lower earners".
They have written a letter to Rachel Reeeves warning that "some jobs on minimum wage will become unviable" in light of the new threshold unveiled at last week’s Budget. Signatories to the letter organised by UK Hospitality, and seen by The Sunday Times, fear the lowest earners will be hardest hit.
The primary tax hike in Ms Reeves’ financial announcement was a modification to employers' national insurance contributions (NICs), set to generate over £25bn for the Treasury. Not only is there an increment in the rate paid by employers from 13.8% to 15%, but the threshold at which employers start paying the tax will be reduced from £9,100 per year to £5,000.
The Times reveals that hospitality chiefs are advocating either for a reduced NICs rate of 5% for those earning between £5,000 and £9,100 or for an exemption altogether. The letter explicitly states: "The changes to the NICs threshold are not just unsustainable for our business, they are regressive in their impact on lower earners and will impact flexible working practices which many older workers and parents rely upon.
"Unquestionably they will lead to business closures and job losses within a year", while also cautioning that "some jobs on the minimum wage will become unviable".
Prominent industry figures from Whitbread and Greene King were among the letter's signatories, according to the Times. These companies join a series of businesses expressing concern over the repercussions of recent tax adjustments announced in the previous week’s Budget.
Earlier this week, Asda's chairman warned of potential price hikes due to the anticipated impact of new regulations. Chairman Lord Stuart Rose highlighted that the rise in employer taxes is "a big burden for business to carry".
He assured that the company will strive to avoid passing on additional costs to consumers, but admitted it's likely to lead to increased prices at the supermarket to some extent. "We are a very efficient industry, as retailers," he said.
"We will do everything we can to mitigate this cost. But of course, you can’t deny it will probably be inflationary to some degree."
Detailing their current assessment, he added, "We’re just working through the details of that now... We’re looking at the impact."
Sainsbury’s has also signalled a £140m hit, while Marks & Spencer earlier reported that the changes would result in £60m in extra costs, further pushed by a rise in the national living wage.