At the start of this year, we reported on exclusive Startups findings that showed hospitality bosses felt the least optimistic about 2025. They were right to worry.
Analysis of jobs Office for National Statistics (ONS) data by the industry’s leading trade body, UKHospitality has found that 53% of all job losses in the UK came from pubs, bars, hotels, and restaurants, after the 2024 Autumn Budget sent employer costs skyrocketing.
UKHospitality represents more than 123,000 venues. In total, it said that about 4.1% of all jobs in the sector, or one in 25, has been lost since last October’s announcement.
According to the group, that percentage is seven times larger than the rate of job losses across the wider UK economy, confirming “the sector is the hardest hit by tax increases.”
Bosses slam “regressive” National Insurance rise
Job losses in restaurants, bars, pubs and hotels total around 89,000 since October 2024, according to the UKHospitality analysis.
The group is blaming this spike on higher taxes announced by Chancellor Rachel Reeves, including a “regressive” rise in the rate of employer National Insurance Contributions (NICs) from 13.8% to 15% at the start of April.
The Office for Budget Responsibility (OBR) had forecast around 50,000 job losses as a result of the changes. As Kate Nicholls, Chair of UKHospitality, pointed out, the actual figure of 164,641 is three times higher. Hospitality alone surpasses that figure by nearly 40,000.
In a triple whammy, Whitehall also lowered the earnings threshold for employers from £9,100 to £5,000 per year – increasing the cost of employing part-time and seasonal workers – and raised the minimum wage and living wage in-line with inflation.
“At a time when the country needs jobs,” said Nicholls, “the Government should be encouraging hospitality to grow and create jobs, not tax them out of existence.”
What else is behind hospitality hiring woes?
The figures from UKHospitality are staggering, but they are not surprising. A perfect storm has been brewing for the hospitality industry, culminating in today’s announcement.
Consumer spending is significantly down as rising inflation makes eating out unaffordable for many patrons. New visa laws have made it more expensive to hire chefs, bar managers, and bakers from abroad, despite the sector being one of the most reliant on non-UK employees.
Business rates also more than doubled at the start of April as a result of the Government withdrawing relief, with the average pub’s rates bill going up from £4,017 to £9,642 a year.
Many employers have raised their prices or introduced new charges to absorb these spiralling costs. But with every penny added to price lists comes the risk of alienating loyal customers, at a time when businesses have never needed them more.
Mandira Sarkar is the owner of Mandira’s Kitchen, a small restaurant in Surrey. “We’re in hospitality,” said Sarkar. “We can’t just pass costs on. It’s becoming impossible to survive.”
More support needed, and soon
Even the big players are bowing out. BrewDog closed 10 pubs and bars last month, and the CEO of Greene King has called for more support to help its struggling franchisees.
Whitehall has responded with some strategic measures designed to boost footfall, like protecting nightlife from noise complaints and awarding some local councils funding to encourage expansion for outdoor dining. But Nicholls has said it’s not enough.
“The Government needs to recognise the devastating impact of its tax increases on working people and communities across the country. It should take action at the Budget to reverse this damage by lowering business rates, fixing NICs, and cutting VAT”, said Nicholls.
