An increase in the national minimum wage could be the “death knell” for many hospitality businesses, according to key sector leaders.
It comes after it was announced that pay would increase by more than a pound to £11.44 per hour from April next year.
The National Living Wage is currently £10.42 an hour for workers over 23.
Chancellor Jeremy Hunt has decided this rate will also be extended to 21 and 22-year-olds for the first time, meaning a full-time worker in this age range would receive a rise worth £1,800 a year.
Reacting to the news, UKHospitality chief executive Kate Nicholls said, ”A reminder that although governmentt announces it, it is businesses who deliver it and why it is so vital other action is taken to reduce tax and costs, particularly rates.”
She added, ”businesses need headroom and margin to deliver. Cuts in hours, jobs and small businesses unable to square the circle and folding doesn’t mean more money in people’s pockets. We need targeted substantive business tax cuts”.
Alex Reilley, chairman of Loungers, warned that without targeted tax cuts tomorrow this ”will force countess small hospitality businesses over the edge.”
”Great news for millions but without targeted tax cuts this is surely the death knell for many small hospitality businesses. I’m also not sure how announcing inflation-busting increases helps control inflation.”
“It also only serves to pour petrol onto the embers of the inflation fire as prices will have to be increased to mitigate higher labour costs”, he said.
Co-founder of Inception Group, Charlie Gilkes, responded, ”yesterday self congratulations for denying public sector workers comparatively modest pay rises to avoid inflation then pushing huge wage increases to the private sector- better be some rabbits up the sleeve tomorrow.”
Jeremy Hunt will announce measures to boost Britain’s economy when he delivers his second Autumn Statement today (22 November).
Hunt is expected to offer a one-year extension to 100% tax breaks for business investment, and cut national insurance contributions.
