The high drama of a global trade war competes for coverage with Keir Starmer’s EU reset, impending interest rate decisions and Nigel Farage’s lead in the opinion polls. News moves fast, and the spotlight moves on. For their part, politicians are always among the most eager to ‘draw a line under it’ and move on; whether the ‘it’ refers to Starmer’s potential breaking of 2020 lockdown rules or his government’s disastrous October budget.
Fortunately, politicians don’t get to decide when a story loses its bite and for that reason we highlight on our front page today an issue that dominated debate for a while, before making way for new or bigger news; the plight facing the UK’s hospitality industry.
According to industry body UKHospitality the sector employs 3.5 million people and generates nearly £100bn for the UK economy, including over £50bn in tax receipts. Behind these numbers sit some huge companies, private and listed, plus plenty of family-run groups and tens of thousands of smaller, independent operators, but they’re facing the same challenges; tight margins, inflation-driven cost increases, overheads, high labour costs and – taken together – a large large number of relatively low-paid staff.
These conditions make it a tough sector at the best of times, and we are not in the best of times.
The industry put up some strong opposition to the tax and labour cost changes announced in the Budget, but the pleas have fallen on deaf ears. Come April, nearly 800,000 hospitality workers will become newly eligible for employer national insurance contributions, costing the sector an estimated £1bn. Little wonder job cuts or recruitment freezes have taken hold, with many venues reducing their opening hours, cancelling planned investment or even shutting their doors for good.
As Manchester-based hospitality entrepreneur Sacha Lord says in his powerful letter to Rachel Reeves, “this is not just about businesses, it’s about jobs, livelihoods, and communities, and time is running out.” The industry has put forward proposals to the Treasury that would reduce the impact of the changes to NICs, but the Treasury does not appear to be listening.
The Chancellor tells us that growth is her “number one mission” and the tax changes causing hospitality businesses sleepless nights and heartache were necessary to save the public finances, but the sector isn’t buying it, and neither am I. Reeves wants to focus on the future, but nobody should forget the damage caused by the decisions she took just six months ago.