Thirteen months of decline: Hospitality’s struggle intensifies ahead of the Budget

The UK’s hospitality sector faces one of its toughest periods in recent memory, with new data revealing a sustained collapse in employment that industry leaders blame squarely on last year’s Budget.

According to analysis by UKHospitality using figures from the Office for National Statistics, there are now 170,000 fewer people on the payroll compared with the period before Chancellor Rachel Reeves’s October 2024 Budget. In the past two months alone, a further 64,000 jobs have disappeared, with more than half of all national job losses coming from hospitality-related businesses.

This decline marks thirteen consecutive months of falling employment, signalling not just a short-term contraction but a deep structural crisis. Restaurants, hotels, pubs and foodservice operators are being forced to cut hours, raise prices, cancel investment, and in some cases, close entirely. The consequences ripple beyond business owners to local communities and high streets, where the sector has long been a source of opportunity and regeneration.

National Insurance changes and rising wage pressures

At the heart of the issue lie fiscal policies introduced in the last Budget—particularly the changes to employers’ National Insurance Contribution thresholds. These measures have disproportionately affected those in part-time and flexible roles, which form a significant portion of hospitality’s workforce. The effect has been to undermine one of Britain’s most accessible and socially inclusive sectors.

The strain is compounded by fears of another National Living Wage increase in the upcoming Budget—potentially to around £12.70 per hour. Industry leaders warn that while fair pay remains vital, an uncalibrated rise could trigger a fresh wave of closures among small and medium-sized operators already struggling to absorb rising labour and energy costs.

Industry unity and growing calls for reform

In a rare show of solidarity, 345 hospitality businesses, including major names such as Greene King, Wagamama, and IHG Hotels & Resorts, have signed a letter urging the government to support the sector and help it “get back to growth”.

The trade body UKHospitality is calling for three immediate measures:

• A reduction in business rates,

• A cut in hospitality VAT, and

• A review and reform of NIC thresholds.

These, it argues, would help reverse some of the damage, protect jobs, and restore investor confidence across the sector.

Kate Nicholls, chair of UKHospitality, described the situation as “a shocking indictment of the damage caused by last year’s Budget,” adding:

“If the Government wants to get more people back into work and revitalise high streets, it needs hospitality firing on all cylinders. Right now, we’re being taxed out.” 

What’s at stake

Hospitality is not only one of the UK’s largest employers—supporting millions of jobs nationwide—but also a cornerstone of local economies, tourism, and culture. The loss of 170,000 jobs since the last Budget represents more than statistics: it reflects an erosion of opportunity, community spaces, and social mobility.

Unless the Government delivers tangible relief in the forthcoming 26 November Budget, industry observers warn the job losses could deepen, threatening the viability of thousands of businesses that survived the pandemic only to face a fiscal storm of taxation and cost escalation.

As Nicholls and her peers emphasise, the solution is not complex—it is political will. Lowering VAT, fixing NICs, and reducing business rates would not merely preserve jobs but reignite one of Britain’s most vital economic engines. Without decisive action, hospitality risks becoming the canary in the coal mine for a wider employment crisis.