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.
Gatwick Airport’s South Terminal has been heavily disrupted after a “suspected prohibited item” was discovered in luggage, leaving passengers in limbo.
Some passengers were reportedly left on planes that weren’t taking off, while others were stranded in the airport for hours after Gatwick made the announcement this morning.
Sussex Police said the explosive ordnance disposal team was being sent in “as a precaution” and a security cordon was put in place.
It now says the incident has been resolved and cleared – but warned there were still “some delays and cancellations”.
Gatwick Airport latest updates
The airport, which is the UK’s second busiest, was set to see off some 316 departing flights today, according to aviation analytics website Cirium.
But what are the rights of passengers if their flights are delayed or cancelled?
Your rights during delays
Your flight is covered by UK law if it departs from a UK airport, arrives at a UK airport on a UK or EU airline, or arrives at an EU airport on a UK airline.
When it comes to significant delays, UK law says airlines must provide you with care and assistance.
Significant delays are classed as:
- More than two hours for short-haul flights of under 1,500km (932 miles)
- More than three hours for medium-haul flights of 1,500km-3,500km (932-2,175 miles)
- More than four hours for long-haul flights of over 3,500km
Here’s what the law says the airline must provide you with until it is able to fly you to your destination:
- A reasonable amount of food and drink
- A means for you to communicate (often by refunding the cost of your calls)
- Accommodation, if you are re-routed the next day
- Transport to and from the accommodation (or your home, if you are able to return there)
It says this must be provided for you for however long delays last, irrespective of what has caused them.
Passengers facing delays have been handed blankets by staff at the airport
Airlines may not always be able to arrange care and assistance for all passengers during major disruptions directly, but the UK Civil Aviation Authority (CAA) says you can organise the things listed for yourself and then claim the cost back from your airline later if you keep every receipt and do not spend more than is deemed reasonable.
In other words, don’t splash out on things like alcohol and luxury hotels during your wait and expect to claim your money back later.
What are your rights if your flight is cancelled?
If your flight is cancelled, the airline must either give you a refund or book you on an alternative flight.
You can get your money back for all parts of a ticket you haven’t used, the CAA says.
If you have booked a return flight and the outbound leg is cancelled, for example, you can get the full cost of the return ticket back from your airline.
“If you are a transfer passenger and you have already completed part of your journey, you are also entitled to a flight back to your original departure point when your connecting flight is cancelled and you decide not to continue your journey,” it adds.
If you still want to travel, your airline must find you an alternative flight – whether it is the next available one, or a flight at an alternative, later date.
If another airline is flying significantly sooner than yours is able to offer, you may have the right to be booked onto a rival airline’s flight, but this has to be negotiated with the company.
On last-minute cancellations, Naveen Dittakavi, founder and chief executive of Next Vacay, said: “If you’re already at the airport once the flight is cancelled, the best thing you can do is stay calm – you are protected against many things that might go wrong.
“Try calling the airline helpline rather than waiting to speak directly with the airport staff. The helpline is often more flexible and may provide you with an e-credit or voucher, or flexibility to change your travel dates quickly.”
Can you get compensation?
In some cases, airlines may have to provide compensation if your flight arrives at its destination more than three hours late – but that is only if the delay is deemed to be your airline’s fault.
Disruptions caused by things deemed “extraordinary circumstances” are not eligible for compensation, according to the CAA.
Downing Street has indicated Israeli Prime Minister Benjamin Netanyahu would be arrested if he arrived on British soil following an international arrest warrant being issued for him.
On Thursday, the International Criminal Court (ICC) issued arrest warrants for Netanyahu and former Israeli defence secretary Yoav Gallant for alleged war crimes and crimes against humanity related to the war in Gaza.
The UK government was reluctant to commit to saying Netanyahu would be arrested if he came to the UK but Sir Keir Starmer’s spokesman said the government would “fulfil its legal obligations” in relation to the arrest warrant.
“The UK will always comply with its legal obligations as set out by domestic law, and indeed international law,” he said.
He added the domestic process linked to ICC arrest warrants has never been used to date by the UK because the country has never been visited by anyone wanted by the international court.
Earlier on Friday, Home Secretary Yvette Cooper said it “wouldn’t be appropriate for me to comment” on the processes involved as the ICC is independent, although the UK is a member.
She told Sky News: “We’ve always respected the importance of international law, but in the majority of the cases that they pursue, they don’t become part of the British legal process.
“What I can say is that obviously, the UK government’s position remains that we believe the focus should be on getting a ceasefire in Gaza.”
However, Emily Thornberry, Labour chair of the foreign affairs committee in parliament, told Sky News: “If Netanyahu comes to Britain, our obligation under the Rome Convention would be to arrest him under the warrant from the ICC.
“Not really a question of should, we are required to because we are members of the ICC.”
After winning July’s election the government said it would not oppose the ICC’s right to issue the warrants.
Netanyahu and Gallant (right) have arrest warrants against them. File pic: Reuters
Ireland, France and Italy have signalled they would arrest Netanyahu if he came to their countries.
Asked if police would arrest the Israeli leader in Ireland, Irish Taoiseach Simon Harris said: “Yes, absolutely. We support international courts and we apply their warrants.”
Germany said it would make a decision if Netanyahu came to Germany but said it is one of the “biggest supporters of the ICC”, partly as a result of history.
A German government spokesman said: “At the same time, it is a consequence of German history that we share unique relations and a great responsibility with Israel.”
An ICC arrest warrant was also issued for Hamas leader Mohammed Diab Ibrahim al Masri, the mastermind behind the 7 October attacks in Israel, for alleged war crimes and crimes against humanity.
Israel claims Al Masri was killed earlier this year but the ICC said that has not been confirmed, so it was issuing the arrest warrant.
Netanyahu’s office said the warrants against him and Gallant were “antisemitic” and said Israel “rejects with disgust the absurd and false actions”.
Neither Israel nor the US are members of the ICC. Israel has rejected the court’s jurisdiction and denies committing war crimes in Gaza.
Read more:
What satellite images tell us about North Gaza
Hamas ready for Gaza ceasefire ‘immediately’
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Why have arrest warrants been issued?
US President Joe Biden described the warrants against Israeli leaders as “outrageous”, adding: “Whatever the ICC might imply, there is no equivalence – none – between Israel and Hamas.”
Former Israeli prime minister Naftali Bennett said the warrants for Netanyahu and Gallant were a “mark of shame” for the ICC.
The Board of Deputies of British Jews said the ICC’s decision sent a “terrible message”.
Hungarian Prime Minister Viktor Orban said on Friday he would invite Netanyahu to visit Hungary and he would guarantee the arrest warrant would “not be observed”.
The ICC originally said it was seeking arrest warrants for the three men in May for the alleged crimes and on Thursday announced that it had rejected challenges by Israel and issued warrants of arrest.
In its update, the ICC said it found “reasonable grounds to believe” that Netanyahu and Gallant “bear criminal responsibility” for alleged crimes.
These, the court said, include “the war crime of starvation as a method of warfare; and the crimes against humanity of murder, persecution, and other inhumane acts”.
It is the first time a sitting leader of a major Western ally has been accused of war crimes and crimes against humanity by a global court of justice.
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