‘This is a killer’: industry reacts to rise in National Living Wage

The industry has criticised the government’s announcement that it will increase the National Living Wage by almost 10% from next April.

It will increase from £10.42 to £11.44 from 1 April 2024.

The Treasury said it was the largest ever increase in the minimum wage in cash terms and the first time it had risen by more than £1. The government added the rise will benefit an estimated 2.7m workers.

But the news has left many in the sector warning the government that such a rise could shut down many venues and businesses, particularly smaller operators, in an already struggling sector.

Writing on Twitter, Leon Samuel Burton, managing director of the Grill Pub Co. which has sites in Staffordshire, Cheshire and Shropshire, said: “This is a killer, I know we would have to fundamentally change our business to even survive. How would then our customers react? I hope the Chancellor has a surprise VAT cut for hospitality tomorrow or else many are gone.”

While Simon Wood, founder of Wood restaurant group on Manchester, wrote: “And where does this magically appear from? Without a review of the obscene tax that is Business Rates and reducing the VAT as we’ve spoken of for so long this is the final nail for so many small businesses.

“The government need to listen to us, and act appropriately."

Alex Reilley, chairman of Loungers, added, while it is “great news” for many workers, without any tax cuts, the introduction of the new living wage will be “the death knell for many small hospitality businesses”, and the news “only serves to pour petrol onto the embers of the inflation fire”.

UKHospitality chief executive Kate Nicholls said such an increase will have “significant knock-on impacts” on businesses.

She added: “If businesses are expected to deliver these wage levels, there must be action to drive down costs in other areas. The first priority on that list needs to be extending business rates relief and freezing the multiplier at the Autumn Statement.

“Without action on business rates tomorrow, many businesses will not even make it to April to deliver these wage increases and jobs will be lost. That scenario benefits no one.

“In the longer term, stronger consideration needs to be given to a lower rate of VAT for hospitality to create a more sustainable tax burden for a sector that employs 3.5 million people and delivers £93 billion to the economy.”

Image credit: Shutterstock/Nick Starichenko