MAGAZINE

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An air of tension lingers as the sector braces for the government’s planned rise to NICs, effective as of 6 April. First mentioned in last year’s autumn budget, the change has weighed heavy on operators’ minds ever since, their unheeded concerns steadily mounting alongside the very real prospect of livelihoods being at stake.

The threshold that businesses start paying NICs on workers’ earnings has been lowered from £9,100 to £5,000, while the level of contribution has been hiked from 13.8% to 15%. And as if that hefty blow wasn’t enough, the sector’s business rates relief has been cut from 75% to just 40%, and capped at £110,000. With some 770,000 hospitality employees being pulled into the threshold for the first time, trade body UKHospitality (UKH) estimates that the move will cost the sector an additional £1bn. A recent joint survey by UKH, the British Beer and Pub Association, the British Institute of Innkeeping and Hospitality Ulster gives operators’ legitimate fears some perspective, with 70% saying they will have to reduce their workforce in response, and 60% claiming the change has forced them to cancel all future planned investment. Not only this, but 29% say they’re going to have to reduce their business’s trading hours, with 15% believing they will have to close at least one site. There’s no time to think about growth when every day is just a battle to survive.

The shift has given restaurant owners no choice but to pass the cost onto customers. In the words of Andy Waugh, co-founder of Sixes, expressed at Dine Out’s recent industry round table, which you can read about from page 20: “We just don’t have that cash sitting around. So, unfortunately, the consumer is going to have to pay for it.”

As price increases trickle in, the true impact of the rise to NICs will start to unravel. Until then, we can only hope that the loyalty of the industry’s clientele – and the steadfast grit of its workforce – is enough to pull struggling businesses back from the brink.

Genna Ash-Brown
Editor