Hospitality share concerns over proposed National Living Wage rise

The Staff Canteen

Britain’s hospitality sector has voiced concerns over the government's proposal of a 10% increase in the National Living Wage.

The concerns follow continued calls from hospitality firms and industry bodies to reduce VAT and business rates, arguing the sector is being failed by the government.

The announcement expected from Britain’s Chancellor Jeremy Hunt and the Treasury, will see the National Living Wage increase from £10.42 to £11.44, starting April 1, 2024.

The Treasury claims this decision will represent the largest-ever increase in cash terms and the first time it has exceeded £1, benefiting around 2.7 million workers.

Despite the positive outlook from the government, concerns have been raised within the sector, with many warning that such a substantial wage hike could lead to the closure of numerous venues and businesses, especially smaller operators in an already struggling industry.

UKHospitality Chief Executive Kate Nicholls highlighted the significant knock-on effects on businesses, and stressed the importance of driving down costs in other areas.

In a post on X, Kate said: “A reminder that although government announces it, [it] is businesses who deliver it, and why it is so vital other action is taken to reduce tax and costs, particularly rates.”

She added: “Businesses need headroom and margin to deliver. Cuts in hours, jobs and small businesses unable to square the circle, doesn't mean more money in people's pockets. We need targeted substantive business tax cuts.”

Echoing Kate’s concerns, Clive Watson Co-Founder of The City Pub Company, said: “Best way to deal with low pay is increase tax threshold at lower end of scale taking millions out of paying tax boosting take home pay.”

He added: “Clobbering businesses with inflation busting pay rises stokes inflation.”

More than 3.5 million people are employed in Britain’s hospitality industry, making it the country’s fifth largest sector, contributing an estimated £93 billion to the economy.

Amongst an increase to the National Living Wage, Britain’s Chancellor is also seeking to cut National Insurance, a tax paid by millions of workers, and extend a £10bn a year tax break for businesses.

He will also set out details of an overhaul of benefits for those with long-term health conditions or disabilities, as part of the government’s Autumn statement.

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The Staff Canteen

The Staff Canteen

Editor 22nd November 2023

Hospitality share concerns over proposed National Living Wage rise