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Rachel Reeves’s tax raid on employers will push up the price of a pint, the boss of pub chain Young’s has warned.
Simon Dodd, the chief executive, said Young’s plans to increase prices between 3pc and 3.5pc because of the increased cost of National Insurance (NI) contributions paid by employers, which comes into effect from April.
This would add around 20p to the cost of a pint sold at £6.30 – the average price of a pint of beer in London according to industry data experts CGA.
Mr Dodd said: “We’ll mitigate as much as we can of the NI contribution – we’ll do that through efficiency, we’ll do that through investing in our pubs. But there will be some price passed on to the consumer.”
However, he insisted that Young’s, which runs almost 300 pubs mainly across London and the South of England, would take a “sensible” approach to increases.
Mr Dodd added: “Our view is to be sensible, because if you price too much, you’ll lose your customers at the end of the day.
“I think if you’re a politician, you have to make hard decisions. I’m not going to say anything about the Government, because they have a tough job – although it’s not helpful.”
Hospitality businesses have warned that the Government’s decision to increase NI contributions for employers, combined with rises in the minimum wage, risk fuelling inflation as companies seek to offset the added cost of labour.
Sir Tim Martin, the chairman of JD Wetherspoon, said in November that the combination of the Government’s tax raid and the prospect of Donald Trump raising tariffs when he enters the White House could trigger a fresh inflation spike.
Food manufacturers have also warned over higher prices. Richard Clothier, of Somerset dairy producer Wyke Farms, told The Telegraph last week that the company would increase cheese prices as a result of growing wage costs.
Mr Dodd’s comments came as Young’s revealed a 7.9pc rise in like-for-like sales over the 15 weeks to Jan 13 compared with a year earlier. He said people were still keen to come out and spend money despite Britain’s economic turmoil, and highlighted premium beers and cocktails as having seen particularly high demand.
He suggested independent pubs rather than groups would face a greater impact from the Budget.
Mr Dodd said: “If you’re a one-man band, and you’ve got one pub, it’s very, very tough with all of the cost headwinds. We’re just fortunate, we have nearly 300 and we trade in very affluent areas.”
Shares in Young’s rose by more than 4.5pc on Thursday.