Episode 189: UK Hospitality's Kate Nicholls on the Triple Whammy of Taxes, Rates, and Wages

In Episode 189 of the Ceres Podcast, Stelios engages in a thought-provoking discussion with Kate Nicholls, CEO of UK Hospitality, to explore the profound challenges facing the hospitality industry in the wake of the recent UK budget. From national insurance thresholds to business rates and wage pressures, this episode sheds light on the triple burden impacting one of the country's most vital economic sectors.

Kate begins by reflecting on the industry's trajectory through tumultuous years marked by Brexit, COVID-19, and political upheaval. As the dust settled after the general election, there was a collective optimism that the recent budget would unlock growth and stability. Instead, the hospitality industry finds itself grappling with an unexpected "triple whammy" of economic pressures, including higher national insurance contributions, rising wages, and increased business rates.

While the sector anticipated some challenges, the dramatic shift in the NIC threshold caught many off guard. As Kate notes, "The cumulative cost impact of £3.5 billion in taxes and wages cannot simply be passed on to customers." This creates a precarious situation for businesses operating at or below break-even, with no room to absorb such steep increases.

Hospitality has long been one of the UK's highest-taxed sectors, with disproportionate profits funnelled back into government coffers. Kate highlights that nearly 75% of profits from the sector are now consumed by taxes—a burden that risks stifling growth and investment. This systemic imbalance is exacerbated by policies that overlook hospitality's foundational role in the UK economy.

The conversation touches on how taxation policies, while aimed at higher earners, often end up impacting smaller businesses the hardest. From independent cafes to family-run restaurants, many owners are left wondering how to navigate an environment where economic survival feels increasingly unattainable.

Kate offers a sobering reminder of hospitality's critical contribution to the economy: employing 11% of the UK workforce and generating 5% of GDP. Yet, the government's narrative around "unlocking growth" often fails to align with the realities on the ground.

One of the recurring themes in the episode is the necessity of advocacy. Both Stelios and Kate stress the importance of business owners making their voices heard—whether by lobbying local MPs or engaging with trade bodies like UK Hospitality. As Kate aptly puts it, "Every individual business owner needs to tell their MP what this means for them. Together, we can push for change."

Beyond the numbers, the discussion delves into hospitality's intangible but vital role in society. From providing entry-level jobs to shaping the skills and experiences of future generations, the sector is foundational to community and economic health. However, without adequate support, these opportunities risk diminishing.

Kate also highlights the generational shift in consumer habits, with younger demographics increasingly opting for at-home experiences over traditional nightlife. She underscores the importance of adapting to these changes, ensuring hospitality remains relevant and resilient.

The episode closes on a note of cautious optimism. Kate acknowledges that while the budget presents immediate challenges, there is still potential for reform. Initiatives such as revisiting the apprenticeship levy, expanding NI exemptions, and reducing the cost of transitioning to brick-and-mortar establishments could offer much-needed relief.

The ultimate takeaway? Hospitality is at a crossroads; its survival depends on collaboration, advocacy, and innovation. As Stelios succinctly summarises, "Hospitality brings joy and bonds people together. It's a responsible way to enjoy life and worth fighting for."

This episode is a must-listen for anyone invested in the future of the UK's hospitality sector. Tune in to the Ceres Podcast for more insights, and join the conversation on how we can protect and grow this cornerstone of the economy.