Hospitality operators have been warned that they could struggle to retain staff because of the controversial government plan to abolish the 10p income tax rate.

It is estimated that around 5.2 million people will be worse off as a result of the changes with those earning under £18,000 a year; who work part time, or are under 25 and have no children worst hit.

Tony Payne, chief executive of the pub trade body Federation of Licensed Victuallers' Associations, said people on low incomes could pay double the amount they do now.

“There’s a question of whether people are going to carry on if they’re paying double,” he warned.

“Suddenly you might get people who think to themselves ‘is it worth it?’ and give up work or who want extra hours to make up their wages, just at a time when the trade is having problems.”

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