Wetherspoon Warns Living Wage Will Kill Pubs

British pub frim JD Wetherspoon has warned that the introduction of the national living wage could lead to more pubs closing.

Chairman Tim Martin insisted the policy will hit the company hard at a time when the pub industry is already struggling with high costs and competition from supermarkets.

Around 96 pubs close down every week in the UK.

Chancellor George Osborne announced last week that the living wage would be introduced for all workers over 25.

It will begin at £7.20 - already a significant jump from the current minimum wage level of £6.50 - and will rise to around £9.35 by 2020.

The change will come into effect from April 2016.

JD Wetherspoon, which operates around 900 pubs in the UK, had already announced it would be raising its average minimum pay to £7.29 from this August, but the living wage will mark an even bigger increase over the next four years.

Its chairman’s concerns come as the chain’s pretax profits are expected to fall 1.5% to £78m in the year to 26 July.

And despite forecasts of a higher £86m profit for the financial year 2015/16 the firm has revised expectations down, saying they anticipate no increase in profits from the £78m level.

Wetherspoon’s share price dropped by more than 7% on Wednesday following the announcement.

The company called on the government to bring VAT sales tax and business rates for pubs into line with those enjoyed by supermarkets in order to stem the flow of British pubs closing down.

Mr Martin added: "Pubs contribute around 40% of sales as taxes of one kind or another and are important generators of jobs.

"Capricious initiatives by the government, widening the financial disparity between pubs and supermarkets, will threaten the future of many more pubs."