Looming April cost increases have caused hospitality business confidence to plummet to its lowest level since October 2022, says UKHospitality. That was when inflation was at a 40-year high.
UKHospitality chief executive Kate Nicholls
With hospitality businesses about to be hit by £3.4 billion in additional annual costs in April, only 14% of businesses feel optimistic about the hospitality market, according to CGA by NIQ’s Business Confidence survey.
Ahead of chancellor Rachel Reeves’ spring statement, UKHospitality is highlighting the urgent need to delay the reduction in employers’ National Insurance contributions threshold. The change alone will cost the sector an additional £1bn per year and will bring 774,000 hospitality team members, 20% of the sector’s workforce, into the threshold for the first time.
UKHospitality has also called for the government’s business rates reform to provide the maximum possible discount to hospitality businesses, aligned with its intention to level the playing field for the high street, and for large hospitality businesses to be exempted from the surcharge.
The trade organisation also wants promised reforms to the Apprenticeship Levy to be brought forward, for hospitality to be included in the first wave of foundation apprenticeships, and the creation of a hospitality growth strategy and action plan.
“Hospitality is facing a crisis of confidence like we haven’t seen since we were in a full-blown energy crisis and inflation was running at over 10%,” said UKHospitality chief executive Kate Nicholls.
“The enormity of the cocktail of costs being simultaneously imposed upon venues is unprecedented and, for many, completely unsustainable. It will simply force businesses to cut jobs, freeze recruitment, cancel planned investment, reduce trading hours and, in the worst-case scenario, close their doors for good.
“These tax increases may well deliver sizeable receipts for the Treasury, but will hit the economy, jobs, communities, and the government’s drive for growth just as hard, and stifle a sector that has historically played a huge part in the nation’s recovery following times of economic downturn.
“At a time when we have seen how hospitality can drive economic growth, as it has done in the past two months, we are urging the chancellor to act swiftly. Delaying the changes to the employer NICs threshold will prevent much of this hardship and allow hospitality to continue on a path to growth.”
