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British shoppers may experience higher prices as large firms voice concerns over National Insurance tax increases set to impact employers. Sainsbury’s and Marks & Spencer have already alluded to potential price rises, while pub chain Wetherspoons has stated that “all hospitality business” will raise prices in the wake of the tax changes. Primark’s owner has also expressed the possibility of increasing investment overseas due to the “weight of tax rises”.
Chancellor Rachel Reeves cited the necessity of the NI changes “to put our public finances on a firm footing.” From next April, employers will pay NI at 15% on salaries exceeding £5000, as opposed to current rates of 13.8% on salaries beyond £9,100. The change is slated to raise £20bn annually, ranking as one of the largest single tax-raising measures of all time.
Sainsbury’s Chief Executive, Simon Roberts, revealed that the NI changes and minimum wage increases would equate to a £140m reduction for the company. Despite efforts to counteract the impact, Roberts acknowledged that consumers could still expect higher inflation.
Wetherspoons Chairman Tim Martin also predicted “an estimated 67% increase in national insurance contributions” following the budget, with all hospitality businesses feeling the pinch and raising prices accordingly. Meanwhile, Marks & Spencer Chief Executive Stuart Machin reiterated the difficulty of facing both NI rate increases and threshold reductions. He could not rule out price rises, adding that “it’s still early days in our planning.”
Reeves has been criticised for her statements that the budget would not impose taxes on “working people.” The Office for Budget Responsibility notes that three-quarters of the impact of the tax changes will fall on employees rather than bosses. This is due to bosses holding back on pay rises and hiring with the prospect of higher wage bills. OBR’s Professor David Miles ba what “very plausible”, adding that lower-paid workers could be disparately affected
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