Hospitality sector calls for NI delay due to £1bn cost

The hospitality industry is calling for the government to delay plans to increase employers’ national insurance contributions (NICs). 

A new study by UKHospitality found that one in five of the sector’s workforce – around 774,000 people – will move into the new employer NICs threshold for the first time under the chancellor’s proposals, resulting in extra costs of £1bn.

The representative body for thousands of hotels, restaurants, cafes, pubs and nightclubs, believes the “regressive changes” will impact hospitality the most because it has a significant proportion of employees who work part-time or flexibly.

It says that in April, the number of the sector’s staff who aren’t eligible for employer NICs will drop from 1.2 million to just over 450,000, resulting in the increase in costs.

Combined with an extra £2.4bn in costs also expected in April, UKHospitality warned employers are already taking measures to cut jobs and investment, as well as raise prices.

It is urging the government to delay or alter the changes and consider measures that “won’t endanger businesses and jobs”, highlighting that alternatives have been proposed.

Measures include a new 5% rate of employer NICs, instead of the new 15% rate, for earnings between £5,000 and £9,100, or a lower rate for part-time lower-earning taxpayers. It believes both options would protect lower earners.

Kate Nicholls, chief executive of UKHospitality, said: “The change to employer NICs is one of the most regressive tax changes ever. The scale of this change is unprecedented, bringing three-quarters of a million people into this employer tax for the first time, and the extent of the impact will be enormous.”

Highlighting that the tax has already caused organisations to rethink investment and recruitment plans, as well as reduce headcounts and increase prices to cope with the additional costs, she described the April plans as “completely misguided”.

“I hope the government can see the devastating impact this will have on businesses, team members and communities, and pause these changes to pursue alternative measures, in partnership with business,” added Nicholls.

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