Standing up for the Hospitality industry

 

The hospitality industry is the third largest employer in the UK, employing about 3.5 million people and contributing £93 billion to our economy. In 2022, hospitality generated £54 billion in tax receipts, £20 billion in exports, and attracted £7 billion in business investment. Put simply, hospitality matters, for our economy and for people’s livelihoods. 

During the pandemic, the sector was strongly supported by the then Conservative Government, with hundreds of thousands of jobs saved. Since the pandemic, the sector has faced significant challenges. Inflation, especially in relation to energy costs and rising food prices, has had a major impact.

The Labour Government’s Budget a fortnight ago could be ‘the straw that breaks the camel’s back’. At the weekend, a large number of industry leaders from the hospitality sector wrote to the government, highlighting their “grave fears” about the impact of the Budget.

Their letter makes for stark reading. They are concerned about the increase in Employers National Insurance, especially relating to the much-reduced threshold that it will paid at. They say that alongside the changes to the national minimum wage levels, these changes this will cost the hospitality sector an estimated £3.4bn a year.

That is not sustainable given the existing pressures. The sector, and with it thousands of jobs, are staring into the abyss. The letter says that the changes to the Employers NI threshold are regressive in their impact on lower earners and will impact flexible working practices which many older workers and parents rely upon. Quoting from the letter, they say “Unquestionably they will lead to business closures and job losses within a year.” 

The letter goes on to state that there is no capacity to pass the costs onto customers, as businesses would be reluctantly forced to raise prices by 6-8% which would fuel inflation, but this couldn’t be realistically done as many customers are at the end of their ability to pay more.

Tragically, unless the Labour Government reconsiders at least their reducing of the threshold that Employers NI is paid at, I fear a wave of future closures in Crawley and beyond in hospitality.