UKHospitality CEO Calls For Urgent Government Action To Save Hospitality Sector

The UK's hospitality industry is facing a “tsunami of costs” that could cripple its recovery and future growth, according to Kate Nicholls, Chief Executive of UKHospitality.

Writing in her latest column for Restaurant magazine, Nicholls warned that escalating financial pressures, particularly changes to employer National Insurance Contributions (NICs), are threatening the survival of hospitality businesses across the country. The decision to lower the threshold for NICs has created an additional £3.4 billion annual burden, which took effect this month.

“This substantial increase in operating costs will force businesses to make agonising choices, with job losses and reduced working hours becoming an inevitable consequence,” Nicholls stated.

She highlighted that the Government’s own analysis predicts tens of thousands of lost jobs as a result of the policy. The NICs change, she said, is one of many pressures squeezing the sector, alongside outdated business rates and a high rate of VAT that continue to “impose a disproportionate burden on businesses, stifling investment, hitting our competitiveness and hindering growth.”

UKHospitality recently launched its Social Productivity Index to underline the sector’s vital contribution to society and the economy. The report found that hospitality is the top-performing, most socially productive sector in the economy, far outpacing other industries currently prioritised in the Government’s Industrial Strategy.

Nicholls commented: “Interestingly, many of the sectors the Government is prioritising in its Industrial Strategy, rank towards the bottom. These sectors are simply unable to reach every part of the UK and support people from all backgrounds with job opportunities like hospitality does.”

She stressed the need for hospitality to be included within the Government’s industrial strategy to create a “fairer and more equitable society right across the UK.”

There was a glimmer of progress this month, as the Government’s commitment to reform the business rates system became law. Nicholls confirmed that restaurants will soon benefit from a permanently lower level of business rates, partially alleviating the heavy financial burden borne by high street businesses in recent decades.

However, Nicholls said UKHospitality would continue to lobby the Government to secure the “maximum possible discount” for the sector when new rates are revealed this autumn.

She concluded: “We all know that hospitality is a vital component of the UK’s social and economic fabric, as a source of employment, a creator of growth, and a driver of regeneration in our towns and cities. This must be recognised and supported, rather than endlessly taxed. An inability to do so threatens businesses, jobs and the regeneration of our high streets.”