The Autumn Budget brings a mixture of opportunities and challenges for the UK hospitality industry. To help digest what it means, Catherine Hinchcliff, Head of Corporate Marketing at Bidfood sat down with Jim Cathcart, Policy Director at UKHospitality, to unpack what the announcements mean for operators, suppliers, and the wider industry.
Business rates
One of the headline points for hospitality businesses was the government’s offer of a five percent business rates reduction. While this was framed as support for high streets and hospitality venues, it fell far short of the 20% reduction that UKHospitality had campaigned for. Many businesses are facing post-COVID revaluations that have significantly increased their costs, meaning that the five percent reduction is a drop in the ocean compared to the significant increases they will face. In some cases, businesses are paying considerably more than before, despite government assurances of support. Jim highlights that this could have a severe impact on the sector and stresses the importance of ongoing campaigns and lobbying to address these challenges.
National Living Wage increases
Employment costs are also set to rise. The budget increased the National Living Wage and removed National Insurance relief on salary sacrifice contributions above £2,000. These changes add significant cost pressures for operators and could influence hiring decisions, particularly for young or entry-level staff. These additional costs may also impact opening hours, staff numbers, reduce resources available for investment and, ultimately, prices for consumers. To support businesses through these challenges, UKHospitality is promoting initiatives like the skills passport, which highlights the sector’s role in providing employment opportunities and building long-term careers.
VAT
Another key area of concern is VAT. Hospitality continues to operate with a twenty percent rate for out-of-home food, significantly higher than the EU average of around twelve percent. A reduction in VAT could stimulate growth, encourage consumer spending, and make the UK hospitality sector more competitive internationally. While a VAT cut was not included in this budget, UKHospitality continue will continue to keep this issue on their agenda, advocating for it as a priority.
Holiday tax
The budget also included proposals for a new holiday tax in England, which has been met with shock and disappointment across the industry. Concerns focus on competitiveness, fairness, and uncertainty about how any funds raised would be used. Whilst other cities in Europe have opted to charge visitors, these countries have a much lower rate of VAT, so it’s not relevant to compare.
Red tape reduction
Amid these challenges, there is some positive news. The government has committed to reducing red tape for businesses. This includes simplifying licensing processes for venues selling alcohol or operating late at night and streamlining planning procedures for new developments or renovations.
But despite these developments, the budget largely missed an opportunity to support growth within the hospitality sector. As Jim explains, hospitality contributes significantly to vibrant high streets, employment, and social wellbeing, yet policies often fail to recognise this social and economic value.
The absence of growth-focused measures will almost certainly limit future investment and development, and the sector risks being overlooked compared to other industries.
In response to the budget, hospitality operators are advised to stay informed through UKHospitality updates, monitor and support campaigns related to business rates, and plan carefully for rising costs in wages, National Insurance, and operational expenses.
The Autumn Budget continues to present a challenging environment for hospitality, but there are opportunities to navigate these changes successfully. Hospitality remains resilient, and with strategic planning, operators can continue to contribute to vibrant communities, provide rewarding careers, and offer outstanding customer experiences. Listen to the full podcast here.
