Tuesday, 8 September 2015

Whitbread threaten higher prices to pay new minimum wage.

Whitbread are saying that they will have to raise prices at their outlets including Costa and Premier Inn so as to be able to pay the new minimum wage which will rise to £7.20 per hour from next April.

The rise in the minimum wage (still not a living wage) should be good news - with the caveat that it only applies to over 25s and so many people under this age will continue to struggle. Of course it may not mean that people have a lot more money in their pockets as the government is cutting tax credits and other benefits at the same time, but it will mean fewer forms and less bureaucracy.

The third side of the triangle is that the government has also been reducing business taxes - both corporation tax and by offering grants to local councils to cut business rates.

Overall, every part of the economy will gain and will lose. Whitbread are benefiting from lower taxes. In return they have to pay their employees a bit more. The workers are getting more in their pay packet but many are getting less from benefits. The government are getting less in tax but paying out less in tax credits. It's not exactly revolutionary stuff but fits with the Tory ethos.

What also fits with the ethos of the free market is that if customers don't want to pay the higher prices that Whitbread are threatening then they can take their trade elsewhere. I would thoroughly recommend using your local independent coffee shop instead of Costa.

1 comment:

Mike Sadler said...


Thanks for sharing.

Interestingly, the article you link to does not include any explicit threats - Whitbread are making a statement that their costs will increase, and pricing will need to change to reflect that. Re-reading the article, I really can't see anything that truly indicates that Whitbread are attempting to influence support for the increase in the minimum wage.

The implication of this being a threat is left to the reader, and I wonder whether there is bound to be some confirmation bias when looking at this topic. When I read the article, I was left thinking "oh, cost's are going up, I may make alternative choices, but I am happy to pay more if it supports struggling people being paid more" - in other words, this isn't bad news about Whitbread, but good news for people who are struggling to earn a living.

I agree that we should still be aiming for a living wage, and you are right, of course - there are some great independent choices we have in Launceston, that we should not forget about.