CRUST OF LIVING
Greggs boss warns of price rises after Laboour’s Budget tax raid
Keep scrolling to see what other retailers had to say
GREGGS' top boss has warned prices could rise after Labour's tax raid announced in the Budget last month.
Chief executive of the no-frills chain Roisin Currie said the measures rolled out in the autumn Statement would put pressure on prices, though is likely to be only "pennies".
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Chancellor Rachel Reeves said during her autumn statement she would raise employers' National Insurance contributions (NICs).
She also announced a reduction to the threshold at which businesses start paying NI contributions from £9,100 to £5,000.
It's estimated that the move will raise £25billion - the equivalent of around £800 per employee for each firm.
The move has sparked fury from a raft of supermarkets and other retailers who have warned the tax increase for businesses could lead shoppers to pay more at the till.
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Greggs is the latest to warn that customers could expect to see the cost of a sausage roll or other baked goods rise because of the decision.
On average Greggs customers spend £4 at its stores and this is forecast to rise marginally.
It comes despite Currie promising there were “no plans” for further price increases this year after bumping the price of its sausage roll in July,
Over the summer, Greggs confirmed the price of its much-loved pastry snack and its vegan alternative had risen by 5p to £1.25.
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At the time, she said the move was necessary after experiencing a rise in costs from having to pay a higher national living wage for its 32,000-strong workforce.
Back in 2021, a sausage roll at the chain cost just £1 but over the past three years, it has increased by a total of 25p.
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Greggs, which has more stores than McDonald's in the UK, will open up to 160 new shops in 2024, with a focus on outlets at petrol forecourts, retail parks and transport sites.
Ms Currie said the Labour government's tax-raising Budget would not halt plans for growth.
She said: "Our shop growth plan, our supply chain investment, none of that changes. We are still absolutely going for growth.";
Growth a the business is also coming from an expansion of its menu such as introducing iced drinks and pizzas, as well as longer opening hours in to the evening, she said in an interview at Greggs' headquarters in Newcastle.
The bakery boss also ruled out slashing the bonus it gives out to employees, which is based on 10% of profits.
Speaking to Reuters she said that she supported higher wages, but that changes to tax thresholds were an unwelcome surprise and would increase its annual costs by tens of millions of pounds.
The National Living Wage will rise to to £12.21 from April next year.
Retailers warn of rising costs
Greggs's decision echoes that of many other retail and hospitality groups who have warned about rising costs.
Lidl chief Ryan McDonnell previously told The Sun the tax raid has left the bargain supermarket dealing with “tens of millions of pounds” in extra costs.
Asda chairman Stuart Rose also said the increase would cost the supermarket giant £100million, and inevitably lead to price increases at the checkout.
He explained: "You cannot absorb £100milion of cost. We don’t have a magic money tree in Leeds.”
Meanwhile, Sainsbury's chief executive Simon Roberts, said the supermarket "just didn’t have the capacity to absorb this level of unexpected cost inflation".
Mr Roberts predicted the National Insurance hike would cost the business £140million and added that it would "feed through into higher inflation".
Wetherspoon boss Tim Martin also said the pub giant would aim to remain competitive on pricing, but would see its tax bill rise by two-thirds next year.
Martin said: "Cost inflation, which had surged to high levels in 2022, gradually diminished over the subsequent two years.
"However, it has now significantly increased again following the Budget.
"All hospitality businesses, we believe, plan to increase prices, as a result.
"Wetherspoon will, as always, make every attempt to stay as competitive as possible."
Chief executive officer of Fuller's, Simon Emeny, told The Sun the price of beers at its hotels and boozers would likely rise by 10p.
What is National Insurance?
NATIONAL Insurance is a tax on your earnings, or profits if you're self-employed.
These contributions make you eligible for things like the state pension and certain benefits.
You'll usually pay National Insurance Contributions (NICs) when you're over the age of 16 and earning a certain amount.
For example, if you earn £1,000 a week, you pay nothing on the first £242.
Earn over that and you pay 10% on the next £725 - so £72.50. Then you pay 2%o on the rest, so £33, which works out as 66p.
For the self-employed rates are slightly different.
You can also get something known as National Insurance in some circumstances when you're not working, for example when you have kids and claim certain benefits.
NICs are usually taken automatically by your employer and paid to HMRC, so you don't need to do anything.
You can see how much NICs you pay on your wage slip.
Anyone working for themselves usually has to pay NICs themselves when completing a self-assessment tax return.
M&S chief executive Stuart Machin also cautioned it was looking at a £120millin hit.
The retailer, which had reported a 20% increase in half-year profits, also said it would do "everything we can" to avoid passing on the extra burden to customers through price hikes.
Royal Mail also warned tat stamp prices could rise again after a £120million hit from the Budget.
The head of one of the UK’s biggest business organisations today hit out at Rachel Reeves’ Budget, saying firms were caught “off guard” by the hike in national insurance contributions.
Rain Newton-Smith, chief executive of the Confederation of British Industry (CBI), said the measures announced last month have made it harder for businesses to “take a chance” on hiring new people.
She also criticised the changes to inheritance tax relief for farmers, saying it had left them “fearful” about the future.
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She said: “The rise in national insurance, the stark lowering of the threshold, caught us all off guard.
“Along with the expansion and the rise of the national living wage – which everyone wants to accommodate – and the potential cost of the Employment Rights Bill, they put a heavy burden on business.”
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