Rachel Reeves has been warned that companies will replace more staff with robots as a result of her ‘jobs tax’.
In her first Budget last month, the Chancellor raised national insurance contributions paid by employers in a £25billion tax raid on business.
The move – branded a ‘tax on jobs’ that breached Labour’s manifesto pledge not to raise national insurance – has sparked outrage among critics who warn it will hit hiring and wages.
Businesses facing tough choices over their staffing costs will increasingly turn to technology, according to a report by analysts at investment bank RBC Capital Markets.
Businesses facing tough choices over their staffing costs will increasingly turn to technology, according to a report by analysts at investment bank RBC Capital Markets
Highlighting the impact of Labour’s Budget bombshell on the High Street, the report said: ‘We think this will result in further automation (e.g. self-scan checkouts) and cost efficiencies, and will lead to small price rises in the sector.’
The report came as official figures from the Office for National Statistics (ONS) showed that unemployment jumped from 4 per cent to 4.3 per cent during Labour’s first three months in power.
Critics said Reeves’s tax raid risks turning the High Street into ‘ghost towns’ as pubs, restaurants and shops shut earlier and open on fewer days to save money on staff.
Increased automation also means fewer staff on the High Street and more self-scan checkouts and QR code menus in their place.
Labour promised to ‘breathe life’ back into the High Street in its manifesto and reform the hated business rates system.
But business rates remain unchanged, and with the national insurance hike and increases to the minimum wage as well as new workers’ rights, this will cost business £5bn.
Primark, which employs 29,000 staff across 191 stores in the UK, has said it will use more self-checkouts in shops and robots in warehouses to cut costs and keep prices down.
Boss George Weston said last week he expects to have fewer staff ‘in a year’s time’ thanks to automated technologies after warning the Budget has heaped ‘tens of millions’ of pounds of costs onto his firm.
Mark Selby, chief executive and co-founder of Mexican restaurant chain Wahaca, said that since the Budget he has been ‘inundated’ with offers from technology companies to replace human workers.
He told the Mail: ‘Hospitality is about creating a nice experience for people.
‘But more and more, people are going “why wouldn’t you look at robots and different ways of having your workforce?”’
Labour’s treatment of his industry feels ‘utterly unacceptable’ and further calls into question the Chancellor’s claim that her Budget would ‘protect working people’, the restaurateur said.
Selby added: ‘It feels very ill thought out. You don’t create economic growth by hitting the biggest workforce groups and making it harder for them to grow.’
Jobs tax: In her first Budget last month, the Chancellor Rachel Reeves (pictured) raised national insurance contributions paid by employers in a £25bn tax raid on business
Luke Johnson, chairman of bakery chain Gail’s, said the decision to raise the cost of doing business ‘only adds to the decline of town and city centres’.
The Night Time Industries Association (NTIA), which represents bars and clubs, has warned four in ten of its members are at risk of closing down within six months.
Michael Kill, the industry group’s chief executive, said: ‘The Budget has effectively signed a death sentence for many night-time economy businesses across the UK.
‘This sector is being pushed to the brink.’
Andrew Goodacre, chief executive of the British Independent Retailers Association, which collectively represents 8,500 shops across the country, said: ‘Our members have already told us they will be forced to reduce staff hours, reduce the number of employees and reduce the trading hours.
‘In short, the Budget has made the revitalisation of high streets, a key mission for this government, very much harder.’
Shadow business secretary Andrew Griffith said: ‘Labour’s tax-rise Budget means the only way hospitality businesses can balance their books is with fewer hours, fewer staff or both.
‘That’s going to leave our high streets like ghost towns many nights of the week.
‘It’s only been a few months, yet under Labour the lights are literally going out.’
A host of companies have warned that Budget measures will push up costs.
Tesco reported a £250million increase a year, Sainsbury’s will take a £140million hit and Marks & Spencer £120million.
Retail expert Jonathan De Mello, founder of JDM Retail, said: ‘Automation and self checkouts will very likely see increased prevalence given the changes to national insurance planned by the Government.’
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