Jessica O'ConnorHospitality leaders are urging the Government to introduce targeted fiscal and innovation support for the sector ahead of the Autumn Budget, warning that rising costs and reduced relief measures are threatening jobs and growth.
Since the October 2024 Budget, hospitality operators have faced a £3.4bn cost increase, driven by higher employer National Insurance contributions, reduced thresholds, increases to the National Living Wage and the scaling back of business rates relief.
The pressures have contributed to an estimated 84,000 job losses, a sharper decline than seen across the wider economy.
Representing one of the UK’s most productive industries, hospitality employs 3.5 million people, contributes £140bn annually and generates £54bn in tax receipts.
However, one in three hospitality businesses are now operating at a loss, and the sector faces a tax burden equivalent to 75% of pre-tax profits – more than any other UK industry.
In an open letter to the Government, Champa Magesh, managing director at Access Hospitality, called for two key interventions to help safeguard jobs and restore stability across the sector.
Magesh said: “The hospitality sector has the potential to be a true engine for national renewal – driving employment, economic growth and community connection.
“Whilst technology software providers such as Access Hospitality are supporting operators to become more efficient and resilient, systematic change needs Government collaboration.”
She urged ministers to “protect our people” through measures including reforming National Insurance thresholds to support lower-income workers, introducing a 5% NICs band between £5,000 and £9,100, or providing exemptions for young people and those transitioning from welfare to work.
The letter also calls for permanent business rates reform following the April 2025 reduction in relief from 75% to 40%, which Magesh said has led to the closure of two venues a day and the loss of 1,100 pubs and restaurants since April.
She also advocated reducing VAT for hospitality food from 20% to 12.5%, in line with European counterparts such as Germany, to “deliver net fiscal gains, boost tourism, sales and job creation.”
Magesh’s second recommendation, “fund our future”, calls for renewed investment in digital transformation.
With schemes such as Help to Grow Digital and Innovate UK Smart Grants no longer active, Access Hospitality is urging the government to include the sector in Innovate UK’s AI adoption and productivity programmes and to create a dedicated Hospitality Digital Transformation Fund.
Magesh said: “Unlocking potential requires fiscal and technological support that enables rather than restricts innovation.
“Just as Government backing has transformed the automotive and manufacturing industries, similar strategic support for hospitality would empower operators to thrive.
“With the right policies in place, hospitality businesses can modernise and prosper in 2025 and beyond, helping to lead the UK’s economic recovery.”
