National Living Wage rise ‘threatens business viability’

The National Living Wage is to rise by 6.7%, from £11.44 to £12.21 an hour from April 2025, the government announced last night (29 October).

The higher-than-expected increase is worth £1,400 a year for an eligible full-time worker.

The National Minimum Wage for 18 to 20-year-olds will also rise from £8.60 to £10.00 an hour, the largest increase in the rate on record.

Chancellor Rachel Reeves said: “This government promised a genuine living wage for working people. This pay boost for millions of workers is a significant step towards delivering on that promise.”

The surprise statement was met with concern from prominent hospitality industry voices, with Kate Nicholls, chief executive of UKHospitality calculating that it would add £1.9b to the hospitality wage bill on top of the cost of the Employment Rights Bill.

“Trying to balance the books from the pockets of high street businesses will simply leave hospitality as collateral damage – threatening jobs, future investment, price increases for consumers and business viability,” she said.

Nicholls also said the wage hike made today’s Budget “even more important”, and businesses would be approaching it “with trepidation”, given rumours regarding employer National Insurance contributions and business rate rises.

“Our companies desperately want to be able to support higher wages for staff but what is being asked of them is simply unsustainable if taxes are going to shoot up at the same time,” she said.

“In light of this, it’s paramount that the Budget includes targeted measures to support the high street and the cost burden it is facing. That must start with addressing the broken business rates system and implementing a lower, permanent and universal level for hospitality.”

Meanwhile, Michael Kill, chief executive of the Night Time Industries Association warned wage rises could cut jobs and strain small businesses.

“Minimum wage hikes may seem like a win for workers, but for small nightlife and hospitality businesses already stretched thin, it’s at breaking point,” he said.

“These increases must be balanced and affordable for businesses, or we risk being counterproductive, cutting shifts and jobs as companies streamline just to survive.”

He added that the move “feels like a distraction from the main Budget” and that the industry “expected a more transparent and straightforward discussion, especially since these decisions directly affect people’s livelihoods and the future of businesses

"The fear across the sector is real and should not be ignored; the government’s lack of insight into how this impacts vulnerable sectors is deeply troubling.”

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