Chancellor expected to increase national minimum wage

As the sector gears up for Rachel Reeves' budget announcement, many expect the chancellor to announce an inflation-busting rise of 6% to the National Minimum Wage. Labour ministers have also suggested that those aged 18 to 20, who currently receive a National Minimum Wage of £8.60 an hour, should be eligible for the same pay as their older colleagues, reports the Times.

Approximately 1.6m people are set to benefit from the national living wage of £11.44 per hour – the minimum for workers aged 21 and above. Many now expect an increase to over £12.12 following commitments from the government to "raise the floor" on wages. 

Earlier this year, UKHospitality reacted to the mandatory surge in business rates and wages. The trade body noted that increases saw the sector's wage bill grow by £3.2bn, representing at least a third of the industry's outgoings, with business rates adding up to an additional £224m. This, paired with an expected rise in National Insurance Contributions (NICs) for employers, means operators are preparing for the potential financial implications of tomorrow's budget. 

Industry responds

"These wage rises are well above expectations, and make the Budget even more important," said Kate Nicholls, chief executive of UKHospitality. "It’s an added £1.9 billion to the hospitality wage bill, on top of the cost of the Employment Rights Bill and, if rumours about the Budget are true, employer NICs and business rate rises.

"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.

"Businesses will be approaching the Budget with even more trepidation following this news. 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.

"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."

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