Since the October 2024 Budget, hospitality operators have been hit by a £3.4 billion cost shock, fuelled by increases in employer NICs, reduced thresholds, National Living Wage rises, and the scaling back of business rates relief.
As a result, the sector has faced several challenges, including 84,000 job losses – a sharper decline than seen in the wider economy.
Representing one of the UK’s most productive sectors, hospitality employs 3.5 million people, contributes £140 billion a year and generates £54 million in annual tax receipts.
In response, Champa Magesh, Managing Director at Access Hospitality, has issued an open letter to the UK Government ahead of the Autumn Budget (26th November), calling for urgent action to safeguard the hospitality industry and unleash its full potential with two key interventions.
Access Hospitality calls on the Government to prioritise TWO interventions for the industry
One in three hospitality businesses are operating at a loss*, along with carrying heavy tax burdens due to 75% of pre-tax profits being paid in tax – more than any other UK industry*.
Champa Magesh has recommended two strategic interventions that will protect jobs, drive innovation and ensure hospitality remains one of the UK’s most socially productive sectors.
Protect our people
Despite hospitality being the backbone of local employment and communities, recent fiscal policies are penalising the workforce that sustains it.
The current national insurance contribution (NICs) thresholds drag 774,000 workers into a punitive tax bracket. We recommend introducing a lower NICs band (£5,000-£9,100) at a 5% rate, or providing exemptions for young people and those transitioning from welfare to work.
Following the April 2025 reduction in relief from 75% to 40%, two venues have closed every day this year, with 1,100 pubs and restaurants closing since April alone. Implementing permanent business rates reform with a lower multiplier would protect local venues, encourage high street investment and safeguard jobs.
With a 20% VAT rate, the UK’s hospitality sector pays far more than its European counterparts – such as Germany’s 7% rate for hospitality food*. Reducing VAT to 12.5% could deliver net fiscal gains, boost tourism, sales and job creation, particularly among rural and coastal communities.
Fund our future
Replacing the gap left by the closure of Help to Grow Digital (2023) and the pause of Innovate UK Smart Grants (2025) would help to boost productivity and technology adoption.
Including hospitality in Innovate UK’s AI Adoption and productivity schemes, establishing a Hospitality Digital Transformation Fund to accelerate uptake of smart technology and prioritising digital innovation in the AI Opportunities Action Plan 2025 will drive meaningful gains.
The hospitality sector is an engine for economic growth
Magesh added, “The hospitality sector has the potential to be a true engine for national renewal – driving employment, economic growth and community connection.
“Whilst technology software providers such as Access Hospitality are supporting operators to become more efficient and resilient, systematic change needs Government collaboration.
“Unlocking potential requires fiscal and technological support that enables rather than restricts innovation. Just as Government backing has transformed the automotive and manufacturing industries, similar strategic support for hospitality would empower operators to thrive.
“With the right policies in place, hospitality businesses can modernise and prosper in 2025 and beyond, helping to lead the UK’s economic recovery.”
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