Britain’s hospitality sector is being taxed into crisis
Britain’s hospitality sector is facing up to a very real crisis, as it’s been revealed that one-third of all hospitality businesses are now operating at a loss.
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This isn’t just a sensationalist headline; it’s a flashing red light for the entire UK economy.
The sector was hit with an unprecedented £3.4 billion increase in its annual costs in April, chiefly through rising employer National Insurance Contributions (NICs), increases to wage rates and a reduction to business rates relief, which has had a resounding effect that threatens jobs, investment and the very fabric of our high streets.
Our latest members survey – conducted by UKHospitality, The British Institute of Innkeeping, the British Beer & Pub Association and Hospitality Ulster – revealing the 11 percentage point increase in loss-making businesses in a single quarter is a chilling indicator of the speed and severity of this crisis.
It also reveals that 60% of businesses have cut jobs and that 63% have reduced staff hours; hugely damaging figures that have a significant, negative impact on people’s lives.
The UK’s hospitality sector is a vital engine of economic growth and, as one of the biggest sectors in terms of employment, a cornerstone of community life. When this engine’s warning light illuminates or it runs out of gas, the impact reverberates far beyond its immediate boundaries, leading to cancelled investment, stagnant job creation and zero ground for growth, which has an overwhelming bearing on the wider economy.
The Government's stated ambitions of achieving 80% employment and revitalising high streets appear increasingly at odds with the current trajectory. How can these targets be met when a sector so intrinsically linked to their success is being squeezed to breaking point?
We aren’t calling on the Government with a plea for special treatment, but rather a call for sensible policy that will set the sector up to thrive and support employment across our cities, towns, and villages. The industry’s demands are clear and pragmatic: a reversal of the employer NICs changes, a VAT reduction for hospitality, and expedited delivery of lower business rate multipliers. These aren't radical measures; they are crucial adjustments that would allow the sector to breathe, reinvest and contribute fully to the wider economy.
The current situation is a ticking time bomb. If left unaddressed, the continued financial strain on hospitality businesses will lead to widespread closures, further job losses and a significant decline in the vibrancy of our towns and cities.
The Government has a clear choice: continue down a path that undermines its own objectives, or act decisively to support a sector that is ready and willing to drive growth, create jobs, and revitalise communities across the country. The future of our high streets, and indeed, a significant portion of our economy, depends on it.
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Kate Nicholls is the Chief Executive of UKHospitality.
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