UK Hospitality Sector Faces £3.4 Billion Annual Cost Increases: Job Losses Feared

• UK Hospitality businesses face £3.4 billion in additional costs from April, including £1.9 billion in wage costs, £1 billion in employer National Insurance Contributions, and £500 million in business rates.
• Seven in 10 hospitality businesses predict that they will have to reduce employment levels, which could result in reduced trading hours and site closures.

Starting this April, the hospitality sector in the UK will bear the brunt of annual cost increases totalling £3.4 billion. These increases encompass £1.9 billion in wage costs, £1 billion in employer National Insurance Contributions (NICs), and £500 million in business rates, as relief is cut from 75% to 40%.

These changes translate into a £2,500 increase in the cost of employing a full-time member of staff. Furthermore, businesses will experience an 18% increase in the cost of employing someone under 18 and a 16% increase for those aged 18 to 20.

The impact of these costs is expected to be severe. Seven out of 10 hospitality businesses have indicated that they will need to decrease employment levels, which could lead to significant job losses and reduced income for workers. Additionally, one-third of businesses anticipate having to reduce their operating hours and 15% fear they will need to close at least one location.

In response to this looming crisis, UKHospitality is calling on the government to devise an urgent strategy to support the hospitality industry and facilitate growth and job creation. They suggest this could involve reducing costs and bureaucratic challenges and ensuring that the upcoming business rates reform, due to be unveiled in the Autumn, provides maximum benefits for hospitality businesses.

Kate Nicholls, Chief Executive of UKHospitality, expressed deep concern about the impending cost increases and their potential effects on the industry. Noting these changes’ significant impact on businesses, workers, and communities, she called on the government to collaborate with industry representatives to develop a plan that addresses these issues and supports the sector.