UKHospitality lobbies government to mitigate 'unprecedented damage' caused by Labour Budget
Leading members of the UK's hospitality sector have written to the Chancellor, warning of “business closures, job losses and cancelled investment” unless immediate action is taken.
Drafted by UKHospitality chief executive Kate Nicholls, in collaboration with UKHospitality board members, signatories include Fuller’s, Stonegate Group and Whitbread.
According to UKHospitality, the industry is facing an additional £3.4 billion in costs from April 2025.
The organisation believes likely consequences will be a number of small business closures within a year, job cuts, a reduction in staff hours and a cull of investment plans.
“Hospitality is disproportionately affected by the changes to employer National Insurance Contributions (NICs). The lowering of the threshold at which employer NICs is paid to £5,000 will bring in thousands of part-time staff that were previously never affected, disproportionately affecting hospitality,” said a representative from UKHospitality.
In response to Rachel Reeves' controversial Budget, the group has suggested the government create a new employer NICs band from £5,000 to £9,100 with a lower rate of 5%. An alternative remedy would involve the implementation of an exemption for lower band taxpayers working fewer than 20 hours per week, targeting support for part-time and lower paid workers.
The letter said: “The changes to the NICs threshold are not just unsustainable for our businesses, they are regressive in their impact on lower earners and will impact flexible working practices which many older workers and parents rely upon. Unquestionably they will lead to business closures and job losses within a year.
“The threshold change brings many team members into employer NICs for the first time. We estimate the threshold change may be four times the cost of the new headline rate. We therefore ask that you consider measures to protect businesses who employ lower earners. We understand that these proposals come at an immediate financial cost, but we are absolutely firm in our belief that the lost growth potential which would result from inaction would be substantially more expensive, for the economy, for society and for the public finances.”
Hospitality leaders had previously lobbied the government in October, requesting that Reeves “fix business rates and prevent bills quadrupling for high streets across the country”.
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