Two-thirds of businesses surveyed by trade bodies say jobs will go as they urge government to delay changes. More than two-thirds of hospitality businesses will reduce staffing as a result of tax changes taking effect in April, according to research by industry bodiescalling on the government to delay the changes.
The survey of pubs, bars, restaurants and hotels found that 70% expected to cut back on employment levels because of the higher costs and reduction in rates relief announced in last autumn’s budget. Of the businesses polled by the British Beer and Pub Association, the British Institute of Innkeeping, Hospitality Ulster and UKHospitality, 60% said they would cancel planned investment as a result of the increased expenses.
The trade bodies are urging the government to postpone the changes to employer national insurance contributions (NICs) to avoid the immediate impact on investments and jobs, and allow the hospitality industry to continue contributing to economic growth.
The government announced in October’s budget that in April it would raise employer NICs to 15%, while also lowering the threshold at which contributions are due to £5,000 from £9,100. In addition, the national minimum wage will rise by 6.7% to £12.21 an hour from April.
The measures are ultimately expected to raise £25bn a year, which ministers say is needed to restore crumbling public services, but have drawn criticism from a string of large businesses, including retailers and hospitality companies, who say they will be forced to cut jobs and raise prices.
“At a time when hospitality has been one of the top contributors to economic growth, the last thing the government should be doing is piling on costs that will impact employment and cut off our ability to grow,” the trade bodies said in a statement.
They added that hospitality businesses are clear that a failure to delay the changes to the NICs threshold would have an “impact on communities, employees and supply chains”. “They have warned about potential lost earnings, lost jobs, reduced trading hours and, in some cases, business failure,” the trade bodies said. “This would mean the loss of essential community hubs that would otherwise drive the local economy and create jobs.”.
Almost a third (29%) of the businesses surveyed in January – representing more than 8,000 sites – said they would reduce trading hours as a result of the extra costs, and 25% said they had no cash reserves left, a rise of six percentage points from three months earlier. A sixth (15%) of respondents reported they would have to close at least one site in order to keep operating.
The warning came as separate research showed that the average advertised salary in the UK climbed to almost £41,000 in January. Sign up to Business Today. Get set for the working day – we'll point you to all the business news and analysis you need every morning.
after newsletter promotion. The increase in average wages was fuelled by “significant” increases in sectors including manufacturing, maintenance and retail, according to the jobs site Adzuna, while large annual pay rises were also reported in logistics, customer services, and domestic help and cleaning. Job vacancies slid further in January, the report found, reaching just under 830,000 in January, the lowest figure recorded for the month since 2021.
Last week figures from the Office for National Statistics showed that pay grew sharply in the final quarter of 2024 and unemployment remained unchanged, despite warnings from business that Rachel Reeves’s autumn budget would lead to job losses. The rise in average salaries “reflects the increasing competition for talent in key sectors, even as overall hiring slows”, said Andrew Hunter, co-founder of Adzuna.
