JDW chairman Tim Martin has said April’s increases to Employers National Insurance (ENICs) could cost the company, which operates around 800 pubs across the UK, an additional £1.2m a week.
Speaking with Sky News on Wednesday 19 February, Martin explained “times were tough” for hospitality businesses, adding the tax rise would hit pubs harder than supermarkets.
“We’ve got more labour costs per pint”, he said.
Martin continued: “Nobody is going to lose their job at Wetherspoon, but I suppose it makes you circumspect about what you’re going to open in the future as a matter of common sense because you’re trying to calculate [if you] can still make a profit.
More pressure
“When you have high taxes, it impacts most on small towns because they’re the ones with the lower levels of sales and that lowers the number of people about. So, I think, in the pub and restaurant industry, it’ll be the smaller towns that will be under more pressure.”
While Martin assured JDW would do what it could to avoid price increases for customers, he warned prices within the sector overall were “certain” to rise after the tax hike comes into effect.
In addition, the chairman predicted inflation would also jump as a result of the changes to ENICs.
Regarding news inflation had hit a 10-month high earlier this week, Martin added: “One of the main things about inflation is that nobody predicts it very well.
Counterintuitive consequences
“So, interest rates have started going down because inflation is going down and then it starts going back up. I just hope it doesn’t go too high, like everyone else.”
When asked about absorbing additional costs, Martin said: “We have to be [good at absorbing costs] in a way, if you’re running a business you have to try and be good at absorbing costs.”
However, the pubco boss, who has been in the industry for more than four decades, asserted rising ENICs costs would have a bigger impact on the businesses than inflation.
He told Sky News: “Labour was a little bit arrogant to start with and now they realise that some of the moves they made have got counterintuitive consequences.
“I think they are learning on the job. Although politicians are incredibly annoying, if you believe in democracy, which we do, you are going to have them, and they won’t all be [Canadian American economist and diplomat] JK Galbraith in economics. I am hoping Labour learn from their mistakes.”
Last month, Martin also warned VAT distortions between the on and off trade risked creating “more supermarkets and less pubs”.
