Wetherspoon's boss: Living Wage will hit pubs in poorer areas

By Sophie Witts contact

- Last updated on GMT

JD Wetherspoon opened its largest site to date in Stansted Airport this year
JD Wetherspoon opened its largest site to date in Stansted Airport this year

Related tags: National living wage, Minimum wage

The boss of JD Wetherspoon has warned that the introduction of the National Living Wage will place added financial pressure on pubs in less affluent areas.

Tim Martin, company chairman, was speaking as the chain announced a 25 per cent drop in pre-tax profits for the financial year to 26 July.

Martin said:  “By pushing up the cost of wages by a large factor, the government is inevitably putting financial pressure on pubs, many of which have already closed.

“This financial pressure will be felt most strongly in areas which are less affluent, since the price differential in those areas between pubs and supermarkets is far more important to customers."

He added that major issues such as minimum wage should not be decided ‘by one or two senior politicians on a whim’, instead of being considered by organisations such as the Low Pay Commission.

The National Living Wage of £7.20 per hour for over 25's will come in to force next April, and is expected to rise to £9 per hour by 2020.

The Government is currently seeking the views of businesses over plans to raise the minimum wage and apprenticeship rate from October 2016​.

Martin also argued that pubs were taxed unfairly, leaving them vulnerable to losing sales to supermarkets with cheaper alcohol prices.

“Supermarkets pay virtually no VAT in respect of food sales, whereas pubs pay 20 per cent – and this disparity enables supermarkets to subsidise their alcoholic drinks sales to the detriment of pubs and restaurants,” he said.

Despite a drop in pre-tax profits profits the 951-strong pub chain reported a 3.3 per cent rise in like-for-like sales.

Part of the 25 per cent fall in profits can be attributed to a change in how the company’s accounting policy treats exceptional items, including crockery, glassware and cutlery. These changes resulted in a one-off charge of £5.2m.

The company opened 30 pubs during the year, with 6 pubs sold or closed. Martin said they intended to open about 15 to 20 pubs in the year ending July 2016.

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