The Entertainer axes new shops after Budget tax rise

The Entertainer toy shop chain says it has been forced to drop plans to open two new stores after the government said it would raise National Insurance (NI) Contributions for employers.

Chief executive Andrew Murphy told the BBC the higher taxes, announced in last week's Budget, meant it could no longer go ahead with the shops and it had also frozen hiring at its head office.

A number of companies, including Sainsbury's and Marks & Spencer, have hinted that Labour's changes to NI could result in higher prices for customers.

The Treasury said: "We had to make difficult choices to fix the foundations of the country."

Last week, the government announced that the employers' NI rate will rise from 13.8% to 15% from next April. The threshold at which firms will start to pay the tax has been lowered from £9,100 to £5,000.

The move is projected to raise about £25bn a year. It follows two NI cuts for workers under the last Conservative government which cut tax revenues by around £20bn.

Labour said that the rises were needed to "restore desperately needed economic stability to allow businesses to thrive".

Mr Murphy told BBC Radio 4's Today programme: "There’s no argument with the government’s ultimate goals... simply the balance with which they pursued them."

He said The Entertainer, which has 166 shops and employs 2,000 people, had chosen two new stores and done viability assessments on them.

"We were just about to initiate the work and unfortunately the changes to National Insurance in particular just tipped that balance so those stores will now not be opening."

On Thursday, Sainsbury's chief executive Simon Roberts said the changes to NI would add around £140m in costs to the supermarket group.

He said: "I don't think you can shy away from the fact that, because of the changes in everyone's cost base, it is going to feed through into higher inflation."