The catering industry is voicing strong concerns over the UK government's recent announcement to increase the National Living Wage by nearly 10% from April 2024, escalating it from £10.42 to £11.44. This substantial rise, while heralded by the Treasury as the largest cash increase ever in the minimum wage, is causing alarm within the sector, particularly among smaller businesses.
Current and Future National Living Wage Rates
| Date |
National Living Wage |
| Current Rate |
£10.42 |
| April 2024 |
£11.44 |
Industry leaders have taken to social media to express their apprehensions. Leon Samuel Burton, managing director of the Grill Pub Co. operating in Staffordshire, Cheshire, and Shropshire, tweeted his concerns, suggesting that such a significant increase could force drastic changes in business models, potentially leading to closures.
Simon Wood, founder of the Wood restaurant group in Manchester, echoed these sentiments. He pointed out the financial challenges this rise imposes, particularly without a review of the Business Rates and a reduction in VAT, which have been long-standing issues in the industry.
Alex Reilley, chairman of Loungers, whilst acknowledging the benefit for workers, warned that without corresponding tax cuts, the new living wage could severely impact small hospitality businesses and add fuel to the inflation fire.
Impact on the Hospitality Sector
The UK's hospitality sector, a vital contributor to the economy, employs around 3.5 million people and delivers approximately £93 billion annually. The sector's reliance on small businesses, which are particularly vulnerable to cost increases, heightens the potential negative impact of the wage rise.
UKHospitality chief executive Kate Nicholls emphasised the need for immediate government action to mitigate these impacts. She called for an extension of business rates relief and a freeze on the multiplier in the upcoming Autumn Statement. Without such measures, Nicholls warned of job losses and business closures, negating the intended benefits of the wage increase.
The Bigger Picture
This decision comes at a time when the hospitality sector is already grappling with challenges such as rising operational costs and recovery from the economic effects of the pandemic. The industry’s reaction underscores the delicate balance between enhancing worker welfare and ensuring the sustainability of businesses that form the backbone of the UK's hospitality sector.
For further details and insights, the original story is available on The Caterer's website here.
