Over two-thirds of the UK’s hospitality sector are set to reduce their workforce due to forthcoming tax amendments scheduled for April, industry bodies have disclosed, urging the government to consider postponing these changes.
A comprehensive survey conducted among pubs, bars, restaurants, and hotels revealed that 70% anticipate a need to diminish their staff numbers in response to the escalating costs and a decrease in rates relief outlined in the previous autumn’s budget.
Representative organisations including the British Beer and Pub Association, the British Institute of Innkeeping, Hospitality Ulster, and UKHospitality have reported that 60% of businesses intend to halt planned investments owing to the heightened financial burdens.
These industry associations are pressing the government to defer the adjustments to employer national insurance contributions (NICs), to mitigate immediate detrimental effects on investment and employment, thereby supporting the sector’s ongoing contribution to the economy.
The government, in its budget announcement last October, declared that from April, employer NICs would increase to 15%, alongside a reduction in the earnings threshold for these contributions from £9,100 to £5,000. Additionally, the national minimum wage is set to rise by 6.7%, reaching £12.21 per hour.
Expected to generate £25bn annually, these measures aim to rejuvenate underfunded public services. However, they have faced opposition from significant business entities, including those in retail and hospitality, who argue that these changes will necessitate job cuts and price increases.
“At a time when the hospitality sector plays a crucial role in driving economic growth, the last thing needed is for the government to impose additional costs that hinder employment and growth opportunities,” stated the trade bodies.
They further highlighted that failing to delay the NICs changes would adversely affect communities, employees, and supply chains, with potential consequences including diminished earnings, job losses, reduced operating hours, and in some instances, business closures, undermining vital community centres that boost local economies and employment.
In January, almost a third (29%) of the surveyed businesses—representing over 8,000 venues—reported they would need to reduce operating hours due to increased costs, and a quarter disclosed they were operating without any cash reserves, marking a 6% increase from the previous quarter.
Additionally, 15% of respondents indicated they might need to shut down at least one site to remain operational.
This cautionary note coincides with other research indicating a significant rise in the average UK salary to nearly £41,000 in January, driven by substantial increases across various sectors, including manufacturing, maintenance, and retail.
Despite a drop in job vacancies to just under 830,000 in January—the lowest for this month since 2021—average salaries continue to climb, reflecting heightened competition for skilled workers across key industries.
