Thousands of Hospitality Jobs Lost Following Budget Tax Changes

The hospitality sector in the United Kingdom has experienced a significant decline, with approximately 89,000 jobs lost since the October 2024 Budget. According to data from the Office for National Statistics analyzed by UKHospitality, this figure accounts for 53% of all job losses in the country during this period. The situation has raised alarms within the industry, as one in every 25 jobs in pubs, hotels, cafes, restaurants, and bars has been eliminated.

The job losses are notably worse than initial estimates by the Office for Budget Responsibility, which predicted around 50,000 job cuts as a result of the fiscal changes introduced by Chancellor Rachel Reeves. A key factor in these losses has been the increase in employer National Insurance contributions, which rose from 13.8% to 15% and lowered the threshold from £9,100 to £5,000 annually. This change has affected more low-paid and part-time workers in the hospitality sector.

Impact of Rising Costs on Hospitality Employment

In addition to tax increases, the rise in the national minimum wage to £12.21 has further heightened operational costs for many hospitality businesses. Data from the Office for National Statistics highlights that there were only 73,000 job vacancies in accommodation and food services for the three months ending in July, marking the lowest number since 2014, excluding the pandemic’s impact.

The chair of UKHospitality, Kate Nicholls, described the extent of job losses as “staggering.” She emphasized that the hospitality sector has been severely impacted by the government’s tax changes, forcing businesses to make difficult decisions regarding staffing, particularly affecting part-time and flexible roles.

The hospitality industry has been facing challenges even prior to these tax changes, as rising costs of living have led to decreased consumer spending on dining out. The post-pandemic recovery has been hindered by soaring energy bills and inflation, resulting in well-known brands like Wetherspoons and Frankie & Benny’s closing multiple locations. Some companies, such as Byron Burger, have fallen into administration, leading to over 200 job losses.

Calls for Government Action and Industry Restructuring

In light of these developments, UKHospitality has urged the government to address business rate pressures, revise National Insurance contributions, and reduce VAT. Nicholls stated, “The Government needs to recognize the devastating impact of its tax increases on working people and communities across the country. It should take action at the Budget to reverse this damage.”

Several companies are already raising prices to cope with increased costs. For instance, Stonegate Group raised the price of beer and alcoholic beverages by 4% in their leased and tenanted pubs. The firm, which owns popular chains like Slug & Lettuce and Walkabout, indicated that this price adjustment reflects the significant pressure faced by the sector over the past year.

Similarly, Simon Emeny, the chief executive of Fuller, Smith and Turner, announced a price increase for pints of beer due to an additional £8 million in costs associated with the tax changes and the minimum wage hike.

The situation has left the hospitality sector in a precarious position as it grapples with increased operational costs while striving to maintain consumer patronage. As businesses navigate these challenges, the call for government support remains urgent, with many in the industry stressing the need for policies that foster growth rather than hinder it.