The trade body says the looming cost increases to employment tax and business rates have caused hospitality business confidence to plummet to its lowest level since October 2022, when inflation was at a 40-year high.
“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%,” says Kate Nicholls, chief executive of UKHospitality.
The Government’s planned rise in National Insurance contributions (NICs) for employers, as announced in last autumn’s Budget, will see the threshold that businesses start paying National Insurance on a workers' earnings lowered from £9,100 to £5,000 and the level of contribution rise from 13.8% to 15% from April this year.
At the same time, business rates relief for the sector will be cut from 75% to 40%, capped at £110,000.
Ahead of Chancellor Rachel Reeves’s Spring Statement on 26 March, UKHospitality has reiterated its call for the reduction in the employer NICs threshold to be delayed.
The trade body says the change to employer NICs 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.
It 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 enormity of the cocktail of costs being simultaneously imposed upon venues is unprecedented and, for many, completely unsustainable,” Nicholls continues.
“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.”
UKHospitality’s other asks of Government include 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.