Hospitality chiefs warn Reeves of carnage over Budget tax hikes
Rachel Reeves will this weekend be told by some of Britain’s biggest hospitality groups that the tax hikes imposed in last month’s Budget risk triggering a tsunami of job losses across the sector.
Sky News has learnt that dozens of bosses from pub, restaurant and hotel operators have agreed to sign a letter to the chancellor calling her inaugural fiscal statement “regressive in [its] impact on lower earners” and warning that “business closures and job losses within a year” are inevitable.
The letter, an early draft of which has been seen by Sky News, has been circulated among executives from Stonegate Group, Britain’s biggest pubs operator; a division of the company which owns Wagamama; Burger King; the Hotel du Vin and Malmaison hotel chains; and Tossed, the high street salad bar operator.
One signatory cautioned this weekend that the contents of the final letter had yet to be finalised and could change.
Collectively, the signatories employ tens of thousands of people across Britain, although the final tally was unclear on Saturday as UK Hospitality, the trade body coordinating the letter, was still canvassing members about their willingness to put their names to it.
In the letter, they repeat a warning that steep increases in employers’ national insurance bills, coupled with the hike in the national living wage, will cost the hospitality industry close to £3.5bn annually.
They also say that the commercial viability of “important public sector catering contracts for schools, hospitals and prisons” will be thrown into question.
The chancellor and prime minister have stressed the budget’s focus on the NHS
Ms Reeves said in the Budget that the Treasury would yield an extra £25bn annually from the employer NICs (national insurance contributions) increase, prompting a barrage of criticism from retailers and hospitality companies which have large numbers of part-time employees.
“The changes to the NICs threshold are not just unsustainable for our businesses but inevitably regressive in their impact on lower earners,” this weekend’s letter is expected to say.
“Unquestionably they will lead to business closures and job losses within a year.
“The increase in employer contributions would have been damaging enough but changing the threshold is far more damaging.
“Without action, many businesses will fail, costing many of the sector’s 3.5 million jobs.”
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Reeves: ‘Raising taxes was not an easy decision’
Among other potential signatories to the letter are said to be Pizza Hut’s largest UK franchisee, Oakman Inns, Tortilla Mexican Grill, Fuller’s and Elior UK, the contract catering giant.
The Revel Collective, which recently changed its name from Revolution Bars Group, is also among those asked to sign it.
The letter calls on the chancellor to create a new employer NICs band of 5% for workers earning between £5,000 – the new lower tax threshold – and £9,100, and to exempt employers from paying NICs on lower-band taxpayers who work fewer than 20 hours a week.
It also asks for an early implementation of business rates reform, or for the Treasury to reverse the temporary increase in VAT from 17.5% to 20%.
“Your stated intent is to rebalance the tax burden away from high street businesses, yet this change to NICs does the opposite, balancing the books on the backs of the high street businesses which provide jobs to all in society, nationwide, while sparing businesses that used technology to shed jobs,” the draft said.
“We understand that these proposals come at a financial cost, but we are absolutely firm in our belief that the business closures and job losses that would result from inaction would be substantially more expensive, for the economy, for society and for the public finances.”
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Sky News revealed this week that some of Britain’s biggest food retailers believed that price rises from next April, when the tax changes come into effect, were inevitable.
Executives at Marks & Spencer and J Sainsbury both subsequently confirmed that possibility when they reported financial results to the City, while Tim Martin, the veteran chairman of JD Wetherspoon, said: “All hospitality businesses, we believe, plan to increase prices as a result [of the Budget].”
Hospitality groups are understood to have told their respective trade association that they may be forced to pass on some of the higher taxes in price increases, although the draft letter also highlighted the belief that customers “are at the end of their ability to pay more”.
The pessimism which has engulfed parts of corporate Britain since the Budget has taken senior Labour figures by surprise, and has thrown into sharp relief the triumphalism expressed by the new government after last month’s International Investment Summit.
In an interview with Sky News last weekend, the chancellor said “businesses will now have to make a choice, whether they will absorb that [employer NICs increase] through efficiency and productivity gains, whether it will be through lower profits or perhaps through lower wage growth”.
Pointedly, she did not highlight the prospect of higher prices for consumers, with some bosses already publicly warning of a renewed spike in UK inflation next year.
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Sky News revealed on Monday that Jonathan Reynolds, the business secretary, had faced widespread anger from chief executives on a call to discuss the Budget.
Nick Mackenzie, the chief executive of Greene King, highlighted on the call that the increase in employers’ national insurance contributions would cause “a £20m shock” to the company, while Fullers’ Simon Emeny warned that it would be forced to halve annual investment from £60m to £30m as a result of increased cost pressures.
Rami Baitieh, the Morrisons chief executive, told Mr Reynolds that the Budget had exacerbated “an avalanche of costs” for businesses next year.
This weekend, UK Hospitality declined to comment on the draft letter.
Hundreds of people affected by the Manchester Arena bombing cannot continue legal action against MI5, judges have ruled.
More than 300 people, including survivors and those bereaved by the 2017 attack at an Ariana Grande concert, brought a case to the Investigatory Powers Tribunal (IPT), claiming failures to take “appropriate measures” to prevent the incident infringed their human rights.
In a ruling on Friday, Lord Justice Singh and Mrs Justice Farbey said the cases could not proceed as they were brought too late.
Lord Justice Singh said: “We are particularly conscious of the importance of the rights concerned… We are also conscious of the horrendous impact of the atrocity on the claimants and their families.
“Any reasonable person would have sympathy for them.
“The grief and trauma which they have suffered, particularly where young children were killed, is almost unimaginable.
“Nevertheless, we have reached the conclusion that, in all the circumstances, it would not be equitable to permit the claims to proceed.”
File pic: AP
Lord Justice Singh acknowledged that while the tribunal “readily understand” why the legal claims were not filed until after the final report from the inquiry into the attack, “real expedition” was needed at that point.
The judge added: “We bear in mind the other matters that had to be investigated and arrangements which had to be put in place but, in our view, the filing of the proceedings was not given the priority which, assessed objectively, it should have been.”
Had the claims gone ahead, the judge noted the security services would have needed to “divert time and resources to defending these proceedings rather than their core responsibilities” – which includes preventing future attacks.
Salman Abedi killed 22 people and injured hundreds when he detonated a rucksack bomb at the end of an Ariana Grande show at Manchester Arena on 22 May 2017.
Manchester Arena bomber Salman Abedi
Hudgell Solicitors, Slater & Gordon and Broudie Jackson Canter, three of the law firms representing complainants affected, said the ruling was “extremely disappointing” for their clients.
In a statement, the firms said: “Ever since the attack in May 2017, our clients have had to endure continued delays but have done so with great patience and understanding in the hope that by allowing all legal processes to be fully explored, transparency and justice would be achieved.
“It took almost six years for the failings of MI5 to be revealed, confirmed when the inquiry chair published his volume three findings in March 2023, in which he said MI5 had missed a ‘significant opportunity’ to prevent the attack.
“This report concluded that within this six-year period, the security service corporate witnesses X and J gave evidence on oath that had presented an inaccurate picture, and the same inaccurate picture had been presented to Lord Anderson when he compiled his report in December 2017.”
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The law firms said following these findings, their clients believed the IPT would “provide the route to the formal vindication of their human rights”.
The firms added: “We are disappointed that time is one of the reasons now being used against them to prevent their claims progressing. Seven years have now passed since the atrocity in May 2017 – six years of that seven-year delay was caused by MI5.
“This judgment certainly doesn’t exonerate MI5. There were failings by MI5 and multiple other parties leading up to and on the actual evening of 22 May 2017 and collectively we continue to support our clients in their fight for full accountability and justice.”
Police with members of the public after the attack. Pic: PA
The inquiry into the bombing found it might have been prevented if MI5 had acted on key intelligence received in the months before the attack.
The agency’s director-general, Ken McCallum, expressed deep regret that such intelligence was not obtained.
Two pieces of information about Abedi were assessed at the time by the security service to not relate to terrorism.
But inquiry chairman Sir John Saunders said, having heard from MI5 witnesses at the hearings, he considered that did not present an “accurate picture”.
Lawyers for those affected previously said the inquiry found there was a “real possibility” that one of the pieces of intelligence could have obtained information which may have led to actions preventing the attack.
And at the hearing earlier this month, Pete Weatherby KC, for those affected, described the IPT claims as “the next step” in vindication for his clients after the inquiry’s findings.
Many areas of Britain faced frosty and icy conditions this morning ahead of the arrival of Storm Bert tomorrow.
The Met Office said it expects the storm to bring “heavy rain, strong winds and disruptive snow to parts of the UK through the weekend” and potentially cause travel disruption and flooding.
Much of the UK experienced temperatures close to freezing last night, the Met Office said, with -6C (21.2F) recorded at Tulloch Bridge in Scotland.
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Snowy conditions in the village of Goathland, North York Moors National Park. Pic: PA
Several yellow warnings for snow and ice were in place across the UK until 10am on Friday, while one covering parts of Scotland will remain in place until midday.
They came ahead of an amber warning for heavy snow and ice in place between 7am and 5pm on Saturday in central parts of Scotland.
The Met Office said 10-20cm of snow was likely on ground above 200m and there could be as much as 20-40cm on hills above 400m.
Several other yellow alerts for wind, rain and snow will also cover much of the UK.
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Met Office meteorologist Honor Criswick said: “Through into Friday… snow showers are set to continue mainly around coastal areas though once again still a few feeding inland at times.
“There will also still be plenty of autumnal sunshine. Still feeling cold though, particularly in those brisk winds – once again we’re only looking at highs of around 5C, slightly higher in the southwest around 7C.
“Across the north those temperatures struggling to move past 2-3C.
“As we head into Friday evening, a change is on its way as we introduce Storm Bert moving its way in from the Atlantic. So we’ll see clouds spilling in from the southwest with outbreaks of rain – heavy at times by the time we reach Saturday morning.”
A woman braves the snow in Aviemore, Scotland. Pic: Reuters
“Heavy” outbreaks of rain are likely throughout Saturday, “falling as snow” at times across parts of England and Scotland, Ms Criswick said.
More than 114 schools were shut in the Highland Council area on Thursday because of snow, almost 40 were shut in Aberdeenshire and 12 were closed in Moray.
In England, 89 schools were shut in Devon, 60 in Cornwall and 18 in Dorset, while in Wales 18 were closed in Denbighshire, 10 in Conwy and two in Wrexham.
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