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| Wetherspoon boss attacks minimum wage plan as profits slump | Wetherspoon boss attacks minimum wage plan as profits slump |
| (about 1 hour later) | |
| JD Wetherspoon founder Tim Martin has warned that a “national living wage” in the UK risks further pub closures, especially in less-affluent areas, and criticised the way the Conservative government has in effect taken minimum wage policy away from the Low Pay Commission. | |
| “There was a nice sense of impasse with the coalition where issues such as this were settled in the economic arena and it was difficult for politicians to cause too much damage. My worry is that these decisions are now all in the hands of politicians,” Martin said. “We can not make the country richer by setting the minimum wage at an unrealistic level.” | |
| Related: George Osborne’s national living wage a gamble, warns CBI boss | Related: George Osborne’s national living wage a gamble, warns CBI boss |
| George Osborne surprised many in the summer budget that the minimum wage would rise to £7.20 in April for workers over-25 and increase to about £9 by 2020. | |
| “The issue is that investment is bound to be affected if businesses feel that important issues, such as the minimum wage, are to be decided by one or two senior politicians on a whim, for political reasons, rather than being subject to careful consideration by organisations such as the Low Pay Commission,” Martin said. | “The issue is that investment is bound to be affected if businesses feel that important issues, such as the minimum wage, are to be decided by one or two senior politicians on a whim, for political reasons, rather than being subject to careful consideration by organisations such as the Low Pay Commission,” Martin said. |
| His comments came as the pubs group reported a 25% fall in pretax profits to £58.7m for the year to 26 July despite a rise in like-for-like sales of 3.3%. | His comments came as the pubs group reported a 25% fall in pretax profits to £58.7m for the year to 26 July despite a rise in like-for-like sales of 3.3%. |
| The results were hit by a large number of exceptional items. The group’s bottom line was weighed down by one-off items including an £11.2m write-down on the value of under-performing pubs. | The results were hit by a large number of exceptional items. The group’s bottom line was weighed down by one-off items including an £11.2m write-down on the value of under-performing pubs. |
| Martin said it was impossible to predict how many pubs might close as a result of being forced to bring in the national living wage but he said his feeling was that the economic pressure would be felt more in Port Talbot, Bridgend or Ashington than in Notting Hill Gate. | |
| “It is especially in the less-affluent areas where the price differential between pubs and supermarkets have widened,” he added. “My real point is that this has been taken out of the economic arena and put into the political arena where politicians do things for populist reasons and perhaps short-term ones.” | |
| Related: Next boss serves up some sober analysis of wage policy | Related: Next boss serves up some sober analysis of wage policy |
| Martin stressed that pub wages represent about 30% of sales and a pint purchased in a pub at the national average price of about £3.50 will represent about 85p in wages. “In contrast, a pint bought in a supermarket, at an estimated price of £1, will only represent about 10 pence of supermarket wages, since their wage percentage and selling prices are both far lower those of pubs,” he said. | |
| Martin has long campaigned about the disparity between pubs being charged 20% VAT on food sales while supermarkets are charged nothing, allowing the big grocers to subsidise alcohol sales. | Martin has long campaigned about the disparity between pubs being charged 20% VAT on food sales while supermarkets are charged nothing, allowing the big grocers to subsidise alcohol sales. |
| Wetherspoon said it increased the minimum hourly rate for staff by 5% in October 2014 and by a further 8% at the end of July 2015. Both decisions were taken without the knowledge that the government was about to announce a new minimum wage. In addition, the group said it paid about 40% of profits (£30.7m in the year under review) as a bonus or via free shares, over 80% of which is paid to people who work in its pubs. | Wetherspoon said it increased the minimum hourly rate for staff by 5% in October 2014 and by a further 8% at the end of July 2015. Both decisions were taken without the knowledge that the government was about to announce a new minimum wage. In addition, the group said it paid about 40% of profits (£30.7m in the year under review) as a bonus or via free shares, over 80% of which is paid to people who work in its pubs. |
| Martin said the coalition’s policy of allowing the Low Pay Commission to in effect determine policy for the lower paid was “imperfect” but it nevertheless was better than leaving it to politicians. | |
| Martin has long campaigned about the disparity between pubs being charged 20% VAT on food sales while supermarkets are charged nothing, saying this allows the big grocers to subsidise alcohol sales. He says it is the biggest danger to the pub industry. | Martin has long campaigned about the disparity between pubs being charged 20% VAT on food sales while supermarkets are charged nothing, saying this allows the big grocers to subsidise alcohol sales. He says it is the biggest danger to the pub industry. |