The election date has been set, and in just a few weeks, your vote can help shape the future of UK hospitality. As politicians enter the campaign trail, we surface the key issues and policies impacting our industry.
The last few years have not been easy for the hospitality industry. People are at the heart of hospitality and delivery of onsite, in-person experiences has been an ongoing challenge: from changing regulations of a chaotic Covid world to ongoing staff shortages and the rising cost of running a hotel. Throughout, the sector has navigated a number of other changes in the way the world and guests operate in our increasingly digital world.
Key governmental policies impacting the hospitality industry
Employee earnings
The National Living Wage (NLW) has been steadily increasing, influenced by inflation and the cost of living crisis, but also due to the Government’s target for NLW to match two thirds of median earnings. As of 1 April 2024, NLW increased by over £1 from £10.42 to £11.44 per hour.
National Insurance Class 1 employee contributions were cut from 12% to 10% in January, before a further cut to 8% from 6 April 2024. A direct benefit to employees with more money in their pockets, however no savings were provided to businesses.
Taxation, costs and business rates
The standard 20% VAT rate has been challenged by numerous associations, lobbying for a reduced level for the hospitality sector. A reduced rate of 5% applied in 2021 post-Covid, and for a short time stood at 12.5%. UKHospitality campaigns to lower VAT to 10%.
Eligible occupied retail, hospitality and leisure properties will receive 75% relief on their business rates bills for 2024/25, which has long been campaigned for by UKHospitality.
Tourist tax has reportedly cost the UK £6.5 billion in lost sales; Brexit brought the removal of VAT-free shopping for all except a few tourist categories. Businesses have called for the end of this policy to reinvigorate tourist spending.
Development
Hospitality apprenticeships are on the rise as businesses look to create jobs and promote careers in hospitality. As of 1 April 2024, the Government fully funds apprenticeships in small businesses covering the full cost of training for anyone up to 21.
The industry is eyeing up options of visas for EU nationals to recruit more workers. While there is a Youth Mobility Scheme, a recent proposal from the European Commission for easier movement of EU citizens 18 to 30 years old was rejected by Prime Minister Rishi Sunak.
Regulation
There’s been a wealth of developments for wider regulation affecting the hospitality industry.
Last year, the Government published its whitepaper setting out its proposed regulatory framework for AI. As they are keen on a pro-innovation approach, there is nothing set in stone but there is acknowledgment that legislation will be needed. In contrast, the EU and to some extent the US - are adopting more prescriptive legislative measures, according to Deloitte.
Sustainability is high on the agenda, and the Environment Act 2021 is a landmark piece of legislation for hospitality, particularly as on 1 October 2023, bans and restrictions were placed on the sale and usage of single-use plastics. The Government also expects all businesses to reach net zero carbon emissions by 2050.
Conclusion
As we approach the UK election 2024, it’s important to be aware of the policies and planned changes that will affect your business.
As an industry - we need to be innovative.
Technology and digitalisation remains a central driver for cost savings and improving operational efficiency while delivering better experiences for staff and guests.
Join and follow the UKHospitality as they give voice to sector challenges and try to ease the burden on our industry.
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