The Entertainer toy shop chain has announced its scraping of two new stores after Chancellor Rachel Reeves said employer’s National Insurance Contribution’s (NIC) would be raised during last week’s tax bomb budget.
In Labour’s first budget in power since 2009, Ms Reeves revealed that the NIC rate would face a sharp 1.2 per cent rise to 15 per cent, with the threshold at which employers begin paying the tax almost halving to just £5,000.
Discussing halting his company’s expansion plans, The Entertainer’s Chief Executive Andrew Murphy said that last week’s budget was to blame and also revealed that the firm would be implementing a hiring freeze at its head office.
The Entertainer is just the latest in a growing list of high street retailers who have expressed their ire with Ms Reeves’ tax hikes, with the heads of both Sainsbury’s and Marks & Spencer hinting that grocery prices may rise as a result.
The government has defended its plans though, saying that it needed to ‘desperately restore economic stability’ off the back of successive NIC cuts under previous Conservative Chancellors.
Speaking to BBC Radio 4 on Friday morning, Entertainer boss Murphy stated that he has no issue with the government’s ultimate goals of bettering the economy, but does take issue with the means by which they are attempting to achieve that.
Mr Murphy told listeners that his chain, which has 166 shops and employs over 2,000 people, had run viability assessments on plans for two new stores in the wake of the budget.
‘We were just about to initiate the work and unfortunately the changes to National Insurance in particular just tipped that balance so those stores will now not be opening’, the toy shop boss stated.
Mr Murphy’s comments come following similar airing of grievances by the likes of Marks & Spencer Chief Executive Stuart Machin, who openly discussed how his company was facing ‘pretty significant costs to mitigate against’.
As a direct result of Labour’s plans to hike the NIC, the supermarket chain is now anticipating a £60 million increase to its tax bill for next year.
Similarly, Sainsburys CEO Simon Roberts told customers following the budget that there was ‘already too much pressure in the pipe’ for the grocery giant to be able to simply swallow the tax increases and not rise the price of goods.
He added that the ‘unexpected barrage of costs’ will ‘feed into a higher level of inflation’ for consumers.
Fashion and homeware giant Primark also disclosed that it may need to look at investing outside of the UK in an attempt to combat its soaring tax bill.
At the weekend, the Chancellor responded to the barrage of anger from businesses over increases to NIC and the living wage by saying that she was not immune to criticism, but went on to argue: ‘We’ve got to raise the money to put our public finances on a firm footing’.
A treasury spokesperson also responded, stating: ‘This government is committed to delivering economic growth by boosting investment and rebuilding Britain’.
