Huge bar chain boss says Budget changes will add 15p to price of a pint as costs soar by £100m

A HUGE bar chain issued a price rise warning after Labour’s tax raid in the Budget, which will force costs to soar by £100million.

ALL Bar One owner Mitchells & Butlers (M&B) told The Sun the price of pints could rise by between 10p and 15p due to measures announced in the Autumn Statement.

In the Budget last month the government pushed up the amount that employers will pay in National Insurance from 13.8% to 15%.

The changes come into effect next April and will increase the costs for employers, which they may be forced to pass on to customers.

It also announced an increase in the National Living Wage.

The group, which also owns brands including Toby Carvery, said higher wage expenses are “by far the most significant increase” in its cost base following moves announced in last month’s Budget.

Chief executive Phil Urban said M&B is facing around £23 million a year in extra costs from the rise in national insurance contributions alone, with the increase in the minimum wage also sending its wage bill surging.

In total, its costs will rise by around 5%, or £100 million, in 2024-25 and Mr Urban said the group’s prices are likely to have to increase as part of efforts to mitigate extra expenses.

He said that prices are already expected to rise across the sector next spring, but added “we’ll probably have to go harder to cover the latest cost increases”.

He said the group – which employs about 45,000 people – will look at prices on a “site by site basis”, but stressed there are no plans to rein in recruitment or cut jobs.

“Having good service is critical,” he said.

Mr Urban’s comments came as M&B’s annual results showed it swung to a pre-tax profit of £199 million for the year to September 28, against losses of £13 million the previous year, with like-for-like sales up 5.3%.

Underlying earnings jumped 41.2% to £312 million on a pro-rata 52-week basis.

The group said like-for-like sales growth had eased to 4% in the first seven weeks of the new financial year, adding it expects “more normalised levels of sales growth as the inflationary environment eases”.

But M&B added a note of caution: “In the year ahead, the main uncertainties facing the group are considered to be the maintenance of sales growth in the face of pressure on consumer spending power, and the rate of cost inflation.

“The outlook for these is uncertain and will depend on a number of factors, including consumer confidence, global political developments, supply chain disruptions and government policies.”

Other retailers warning of rising costs

M&B's announcement follows price increases from many other retailers and hospitality groups.

Yesterday Greggs’ boss Roisin Currie warned that prices could rise after the Budget tax changes.

She said the measures rolled out by Chancellor Rachel Reeves would put pressure on prices, but it was likely to be only “pennies”.

Meanwhile, last week Lidl chief Ryan McDonnell told The Sun that the tax raid had left the major supermarket with “tens of millions of pounds” in additional costs.

Bosses of major retailers including Asda, Primark, Sainsbury’s and M&S have also issued similar price warnings.

Asda chairman Stuart Rose said the increase would cost the supermarket £100million, which would inevitably lead to price increases.

He explained: "You cannot absorb £100milion of cost. We don’t have a magic money tree in Leeds.”

His warning followed comments by Sainsbury’s chief executive Simon Roberts, who said the supermarket “didn’t have the capacity” to absorb this level of unexpected cost inflation.

He said the National Insurance hike would cost the business £140million.

Sainsbury’s is already looking to close Argos sites to save money.

Popular pub chain Wetherspoons has also warned that it may be forced to put up its prices.

Its boss Tim Martin said it would aim to stay competitive on costs for customers.

The chain's tax bill is expected to rise by around two-thirds next year due to the National Insurance hike.

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