Pubs face hit of £1,500 per week in Budget tax raid

Labour’s tax-raising Budget will cost pubs £1,500 a week, according to the boss of Wetherspoons.

Tim Martin said the company is facing a £60m-a-year hit from hikes to National Insurance and the minimum wage next month.

He said this will cost his 796 pubs £1,500 each per week.

Martin added the changes will exacerbate the disparity between pubs and supermarkets, which do not pay VAT on food – a tax break he says gives them the firepower to sell beer on the cheap.

‘Since labour costs are around 35 per cent of the pub industry’s sales, compared to around 11 per cent for supermarkets, increases of this nature inevitably have a disproportionate impact on pubs, exacerbating the already-wide price differential for customers between the on and off-trade,’ he said.

‘The combination of much higher VAT rates for pubs than supermarkets, combined with increased labour costs, will weigh heavily.’ Wetherspoons shares fell 9.4 per cent, or 56p, to 541p.

Hit hard: Tim Martin said Wetherspoons is facing a £60m-a-year hit from hikes to National Insurance and the minimum wage

Analysts said the group will have to increase food and beer prices to offset higher costs.

Charlie Huggins, manager of the quality shares portfolio at Wealth Club, said the increases will be ‘frankly crippling and will likely eat further into profit margins’.

‘The cost of a burger and pint will have to rise to help mitigate this pressure, which hardly encourages more punters through the door.

‘Aside from the depths of the pandemic, life has probably never been tougher for pub and bar operators.’

The comments came just days after Shepherd Neame – Britain’s oldest brewer behind beers such as Bishops Finger – said it will put up prices as a result of the cost increases announced by Rachel Reeves in October.

The industry’s woes make a mockery of the Chancellor’s claim to have taken ‘a penny off a pint in the pub’ by cutting beer duty.

After announcing £40billion of tax hikes in the Budget, Reeves is set to outline spending cuts in the mini-Budget next week.

Despite the cost pressures, Martin said Wetherspoons is on track for a ‘reasonable’ performance over 2025. However, it reported an 8.6pc fall in profits to £32.9m, even after revenues rose 3.9 per cent to £1.03billion.

It said like-for-like sales have increased by 5 per cent over the seven weeks to March 16.

Garry White, chief investment commentator at Charles Stanley, said: ‘It wasn’t exactly trebles all round. The share price direction of numerous businesses is now in Rachel Reeves’s hands. Should she provide some relief then this should benefit the valuation of companies such as ‘Spoons.

‘If no help is forthcoming, it may be a long, hard year.’