‘Call time on NIC hike’ say hospitality businesses

Looming April cost increases could force 70 per cent of hospitality businesses to cut staff, new research has revealed.

Trade bodies are now calling on the government to work with them and delay employer National Insurance Contributions (NICs) threshold changes so that hospitality can continue to contribute to economic growth.

Chancellor Rachel Reeves announced in October’s budget that government would raise employer NICs to 15 per cent in April, 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 per cent to £12.21 an hour from April.

Businesses are warning they will be forced to make painful decisions to weather the new costs. 

A joint survey by leading hospitality trade associations has revealed how the sector fears it will be drastically affected by new employment costs and the reduction in rates relief come April.

The report reveals that 70 per cent will reduce their employment levels, risking job losses and lost income for workers.

The survey of pubs, bars, restaurants and hotels found 60 per cent looking to cancel planned investment as a result of the increased expenses while 29 per cent will reduce trading hours.

A quarter of them say they have no cash reserves left and 15 per cent believe they will have to close at least one site.

The British Beer and Pub Association, the British Institute of Innkeeping, Hospitality Ulster and UKHospitality are highlighting the strong record the sector has in delivering economic growth.

Hospitality was one of the top contributors to GDP growth in November and December 2024.

They say a delay to the changes to the employer NICs threshold would avoid the immediate impact on jobs and investment revealed in the survey. Instead, it would allow hospitality to deliver economic growth further and faster.

When asked how the government could support the sector, businesses cited a reversal of employer NIC changes as the second biggest priority after a lower rate of VAT for hospitality.

In a joint statement, the trade bodies said: “These figures should serve as a clear warning that pubs, brewers and hospitality venues will be forced to make painful decisions to weather these new costs, which will have damaging impacts on businesses, jobs and communities.

“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.

“We want to work with government so we can continue to vitally boost the economy, which is why we urge them to delay the changes to the employer NICs threshold. This would help save jobs and allow the sector to continue on its growth path.

“If it doesn’t act then businesses are clear that the impact on communities, employees and supply chains will be significant.

“They have warned about potential lost earnings, lost jobs, reduced trading hours and, in some cases, business failure. This would mean the loss of essential community hubs that would otherwise drive the local economy and create jobs.

“Our message to government is to delay its changes to the employer NICs threshold and allow hospitality to continue to deliver economic growth, regenerate our high streets and support local communities.”

Nearly 300 pubs closed across England and Wales in 2024 – an equivalent of six a week – according to latest figures from the British Beer and Pub Association (BBPA)

• To discuss any issues raised by this article please contact me on 01772 430000