​National Insurance Increase Faces Backlash Amid Hospitality Fears

Plans to raise employers’ National Insurance contributions in 2025 have sparked heated debate in parliament, with cross-party MPs warning of dire consequences for the UK’s hospitality sector. The proposed measures, which include raising the rate from 13.8% to 15% and lowering the earnings threshold for contributions from £9,100 to £5,000, have drawn sharp criticism from industry advocates and politicians alike.

Angus MacDonald, Liberal Democrat MP for Inverness, Skye, and West Ross-shire, described the policy as a “catastrophic piece of legislation” that could devastate small and medium-sized businesses in hospitality and retail. “Treasury ministers must be aware of the complete disaster this will cause for Scottish hospitality businesses,” he said, highlighting the sector’s fragile recovery following years of economic uncertainty.

Economic Implications for Hospitality

Conservative MP Richard Fuller of North Bedfordshire cited data from UKHospitality estimating the policy could cost pubs, clubs, hotels, and restaurants approximately £1 billion annually. He questioned whether such financial pressures would force employers to make significant job cuts. “Does the minister honestly think that this will not mean job losses in the hospitality sector?” Fuller asked, echoing concerns across the political spectrum.

Meanwhile, Daisy Cooper, Liberal Democrat MP for St Albans, argued that the policy would deter hospitality businesses from hiring part-time staff, a key employment model in the sector. “Companies have told me this budget will disincentivise them from taking on part-time workers,” she said.

© UK Parliament / Maria Unger, CC BY 3.0, via Wikimedia Commons

Government Defends Tough Choices

Exchequer Secretary to the Treasury James Murray defended the proposed changes as necessary to stabilise the nation’s finances. He acknowledged the business challenges but argued that raising the employment allowance from £5,000 to £10,500 would offset some of the impact for smaller firms. Additionally, Murray highlighted continued relief of business rates for hospitality venues as part of the government’s support package.

“I recognise that the decision we are taking will have impacts, and in some cases, it will mean that employers have to take difficult decisions,” Murray stated, urging MPs to consider the broader need to “get our country back on track.”

Industry Voices Warn of Uncertain Futures

Despite these assurances, opposition MPs remained sceptical. Stuart Anderson, Conservative MP for South Shropshire, shared the concerns of publicans in Ludlow, who have expressed fears about their ability to stay profitable under the new rules. “They are at the stage where their turnover is the same, their footfall is roughly the same, but they cannot see, as of next April, how they can make a profit,” Anderson said.

His comments reflect a growing sentiment among business owners facing mounting costs and narrowing margins. With many already struggling to recover from the impact of the pandemic, the proposed changes risk tipping some into closure.

As the debate continues, the future of the hospitality industry hangs in the balance. Will government support measures offset the financial burden of rising National Insurance contributions, or will this policy mark a turning point for an already embattled sector?