Hospitality warns of further job cuts amid Budget uncertainty

More than half of hospitality businesses have warned they will have to reduce the number of staff they employ if the sector fails to receive adequate support in next week’s Budget.

The industry has already suffered from 89,000 job losses since April’s tax increases, accounting for 53% of the 164,000 total job losses recorded in the UK since the 2024 Budget – three times worse than initial estimates from the Office for Budget Responsibility.

According to the latest national survey conducted by a coalition of hospitality trade bodies, 58% of businesses say they will have to reduce the number of staff they employ and/or increase prices should the Budget fail to ease pressures on business.

The warning from members of UKHospitality, the British Institute of Innkeeping (BII), the British Beer & Pub Association (BBPA) and Hospitality Ulster comes at a time when the industry is still recovering from the consequences of last year’s Budget.

The survey revealed that almost three-quarters (73%) of businesses have less than six months of cash reserves, while three in 10 businesses (29%) reported they had no cash reserves – a record high.

Half of businesses have already been forced to cut staff and 60% have reduced staff hours, meaning the number of hours available to staff has decreased by 8% on average, compared to this time last year.

The majority (70%) of respondents have also increased prices since April – on average by 5% – when the rise in employer NICs, National Living Wage and the end of business rates relief kicked into effect, creating a £3.4b additional annual tax burden on hospitality.  

In a joint statement, the trade bodies said: “The situation facing our local pubs, neighbourhood restaurants and other hospitality venues is becoming increasingly perilous.

“No one wants to see jobs and communities hit even further, but it’s clear that they will once again be impacted if there is not adequate support for our sector at the Budget next week.

“Lower business rates, amendments to employer NICs and a cut to VAT are the measures that will deliver the relief and stability that hospitality desperately needs. We urge the chancellor to act next week to protect cherished local venues, which support local jobs, economies and communities.”

Just last week, 345 hospitality businesses signed UKHospitality’s open letter to the chancellor urging significant intervention to support the sector ahead of the Budget.

It comes amid talks the government is planning to give mayors in England the power to introduce a tax on overnight hotel stays, a move that is being criticised by UKHospitality.

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