Chancellor Delivers Body Blow To Hospitality

Scotland's top hospitality operators will have to find a staggering £3* million after today’s Budget announcement by Chancellor Rachel Reeves. The decision by the UK Government to raise National Insurance Contributions and the National Living Wage has dealt a body blow to businesses across the country with hospitality one of the worst affected.

Stephen Montgomery spokesperson for the Scottish Hospitality Group, which represents the largest group of independent, family-owned hospitality businesses in Scotland, comments, “Today's announcements are a blow to businesses across the country, but it is particularly concerning for the hospitality industry. It is estimated that it the Chancellors plans will add 10% to operating costs and it could certainly cost jobs."

He explains, “The rise in National Insurance Contributions for employers at 1.2%, and the reduction from £9,100 to £5,000, will see most of our members paying an additional £160,000 a year and that’s before the 6.7% and 16% increase in the National Minimum Wage is included or the added costs implementing the Employment Rights Bill. For the larger businesses in our group, those with 700+ employees, it will add a staggering £3 million of costs when you factor in the National Living Wage increase."

“SHG cannot see how this budget addresses the Government's ambitions of a 'dynamic, modern and growing economy.' The effect on hospitality, a key sector to growing the economy, will be to stifle growth and investment, the very opposite of what has been promised.”

“With £3.4 billion in additional Barnett consequentials, the Scottish Government now has the funds available to make good on its commitment to support the hospitality sector and deliver an immediate reduction of the business rates poundage to 35p in the coming Holyrood budget."

“This is particularly the case given the Chancellor of the Exchequer has extended business rates relief for the hospitality sector in England and has also indicated the UK Government will reform the entire business rates system from 2026."

“Reducing the business rates poundage to 35p in the Holyrood budget would help the hospitality sector to boost economic growth, create jobs and support Scotland’s communities and high streets, while also ending the inherent unfairness that sees hospitality businesses taxed at a higher rate than retail businesses.”

*The £3m quoted is made of National Insurance and NMW increases it excludes Pension Contributions increase and cost implementing the new Employment Rights Bill.