Britain’s oldest brewer with 300 pubs and hotels warns of price rises following Government tax raid
A MAJOR brewer which runs 300 pubs and hotels has warned of price rises following the Government’s Autumn Budget.
Shepherd Neame has become the latest chain saying it will have to bump up prices for customers following the tax raid.
From April, employer National Insurance Contributions (NICs) are rising from 13.8% to 15% while the threshold at which businesses have to pay them is falling from £9,100 to £5,000.
The national minimum and national living wages are also rising later this year, piling further pressure on bosses.
The brewer, which claims to be the oldest in the UK and runs 300 pubs and hotels in London and South East England, said the combined NIC and national minimum wage hikes would cost it £2.6million.
It said: “In common with other operators across the sector, we are not immune to the many cost headwinds in the second half following the Government’s recent Budget, notably the increase in national living wage and national insurance from April.
“We have plans to mitigate the majority of the cost increases over the next 18 months, through proactive management action including price increases and cost efficiencies.”
The announcement from Shepherd Neame comes despite it recording strong trade over the festive period, with sales up 7.4% for the five weeks to January 6 compared to the same period the year before.
It said sales were strongest inside the M25, up 13.3% like-for-like, while like-for-like retail sales for the 26 weeks to December 28 were up 4.4%.
Despite the upcoming hikes to NICs and national minimum wages, the brewer said it still expected to see revenue grow and turn a profit in the first half of 2025.
PUB CHAIN PRICE WARNINGS
Shepherd Neame is the latest in a string of pub chains that have warned of prices rising due to the Government’s Budget tax raid.
Simon Dodd, chief executive of Young’s, said earlier this month the chain plans to hike the price of a pint by around 20p.
He 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.”
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 the Autumn Budget.
Chief executive Phil Urban said M&B was facing around £23million a year in extra costs from just the rise in NICs, 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.”
It’s not just pub chains either, with a number of retailers saying they will be forced to up their prices to cover the tax hike.
Fashion giant Next said it will have to raise prices by 1% following the Government’s announcement on NICs.
M&S has also warned it will have to hike prices, although they will be “behind the market”.
The knock-on effect from the hike is leading to companies slashing jobs as well.
A recent survey by S&P Global Market Intelligence revealed businesses are cutting staff at the highest level since 2009, other than during the pandemic.
What are employer National Insurance Contributions (NICs)?
Consumer reporter Sam Walker tells you everything you need to know.
Employer National Insurance Contributions (NICs) are effectively a tax on businesses used to cover social security benefits like Universal Credit and the state pension.
NICs are also paid by workers and the self-employed.
According to the Institute for Fiscal Studies (IFS), NICs are the UK’s second-biggest tax, expected to bring in around £170billion this financial year.
Employers only pay NICs on workers’ salaries from a certain threshold. This is currently £9,100 but will drop to £5,000 from April 6.
Those of state pension age or older do not have to pay NICs, but employers with workers aged 66 or older have to pay NICs on their earnings.
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