Bosses to slash jobs and investment after shock property tax raid

Hotel, pub and restaurant chiefs are preparing to cut investment and jobs after Rachel Reeves launched a stealth tax raid on the hospitality industry.

Some of Britain’s biggest chains said they would be forced to rein in spending plans and raise prices as a result of reforms to business rates – a form of property tax – that have left many nursing tens of millions of pounds in additional costs.

Surinder Arora, the founder of the hotel operator Arora Group, said that the Chancellor’s plans would mean “laying off more people, sadly”, as a result of an 80pc spike in the company’s business rates bill.

Mr Arora, who runs 21 hotels in and around London, said: “That’s not just going to be our group; everyone is saying the same thing.”

Tim Martin, the boss of JD Wetherspoon, said: “Prices will definitely rise across the industry, profits will be under pressure, and investment will be curtailed.”

Ahead of the Budget, Ms Reeves promised the lowest taxes in more than three decades for pubs, restaurants and small shops, paid for by increasing the levy on higher-value properties such as warehouses used by Amazon and other online giants.

However, many hospitality businesses face soaring bills after a 40pc discount introduced during the pandemic was scrapped and the way business rates are calculated changed.

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Kate Nicholls, chairman of UKHospitality, said: “These reforms were meant to level the playing field between the high street and online giants – instead, they’re doing the opposite.

“Big distribution warehouses, office blocks and out-of-town supermarkets are seeing their rates bills go up by a fraction compared to pubs, hotels and other hospitality businesses.”

Nick Mackenzie, the chief executive of pub giant Greene King, said: “The Budget piled more pressure on the sector. Pubs up and down the country will be paying thousands of pounds more every year.”

Dominic Paul, boss of Premier Inn owner Whitbread, warned that the “punitive tax increases” announced in the Budget will “place significant extra costs on our business and require us to accelerate cost savings.” Whitbread estimates the shake-up of the business rates system will cost it between £40m and £50m. It owns more than 800 Premier Inns across the UK.

Property tax consultancy Ryan said hotels, holiday parks and music venues were among the top 10 biggest losers from changes to business rates. Alex Probyn, of Ryan, has warned many hospitality businesses “face immediate and destabilising increases in tax liabilities”.

Impact on employment

Jon Hendry-Pickup, the chief of Butlins, said the holiday parks operator will “need to slow investment in our resorts to account for the additional cost”.

He said: “The Chancellor’s tax and spend ideology will end up hurting those who are looking for jobs in parts of England already facing high unemployment, like Skegness, Bognor Regis or Minehead.”

Changes to property levies have prompted widespread dismay across the hospitality sector, which was among the hardest hit by the Chancellor’s first budget last year.

A decision to lower the threshold at which employers’ National Insurance is paid and to increase the minimum wage ahead of inflation hit pubs, bars and other entertainment businesses particularly hard, given the high level of part-time and low-paid workers in the sector.

Sacha Lord, chairman of the Night Time Industries Association, which represents nightclubs and late-night bars, said: “We are going to witness a raft of closures. Pubs, independent restaurants and cafes are all at severe risk of closure.”

He added: “I have never heard such fear within my sector.”

While large companies can absorb the costs by cutting jobs, curtailing investment, or raising prices, many smaller businesses face potentially devastating price increases.

Sam Carlisle, a restaurant and vineyard owner in Wyken, Suffolk, said his business rates bill was set to spiral from £3,897 last year to £13,561 – a rise of 248pc in two years, he has calculated.

Mr Carlisle said: “The Budget displays an astonishing lack of understanding of how small businesses operate. Their ignorance is so staggering that at times it is hard to believe it is ignorance and not a wilful attack.”

Mr Martin said: “I should have opened a small supermarket in 1979, not a pub.”

A Treasury spokesman said: “We’re protecting pubs, restaurants and cafés with the Budget’s £4.3bn support package – capping bill rises so a typical independent pub will pay around £4,800 less next year than they otherwise would have.

“This comes on top of cutting licensing costs to help more venues offer pavement drinks and al fresco dining, maintaining our cut to alcohol duty on draught pints, and capping corporation tax.”

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