More than two-thirds of hospitality firms to reduce staff

More than two-thirds of hospitality businesses will reduce their staffing levels due to an increase in employer national insurance that comes in in April.

A survey by the British Beer and Pub Association, the British Institute of Innkeeping, Hospitality Ulster and UKHospitality found that 70% expected to cut headcount due to rising employment costs.

Sixty per cent of those polled said they would cancel planned investment, and the trade bodies are urging the government to postpone the NIC rise, which was announced in October’s Budget.

Almost a third (29%) said they would reduce trading hours as a result of the extra costs, and 25% said they no longer had any cash reserves. Fifteen per cent said they would have to close at least one site for their business to survive.

“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,” the trade bodies said in a statement.

“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.”

Earlier this month, Kate Nicholls, chief executive of HospitalityUK asked the government to delay “regressive changes” to NIC contributions and the threshold at which they are paid.

The body estimates that one in five of the sector’s workforce will move into the new employer NIC threshold. Nicholls has suggested the government look at alternatives, such as introducing a new 5% rate of employer NICs for earnings between £5,000 and £9,100.

Despite concerns raised by trade bodies in numerous sectors, job postings have risen since June 2024, according to the latest data from the Recruitment and Employment Confederation.

From April, employers’ national insurance contributions will rise to 15% from 13.8%, and the threshold at which contributions are paid will decrease from £9,100 to £5,000.

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