National Living Wage to increase by 4.1% to £12.71

The National Living Wage will increase to £12.71, an increase of 4.1%, the government has announced ahead of today’s budget. The wage rate for 18 to 20-year-olds will also increase to £10.85, a higher-than-expected increase of 8.5%.

In total, the wage increases represent a total £1.4 billion in additional cost for hospitality businesses, prompting a warning from trade body UKHospitality that business rates reform is now critical for the sector.

Kate Nicholls, chair of UKHospitality, said: “Increases to minimum wage rates are yet another cost for hospitality businesses to balance, at a time when they are already being taxed out.

“These additional costs make action at the Budget to reduce hospitality’s tax burden even more important, especially if businesses are expected to sustain this level of annual wage increase.

“Hospitality businesses have reached their limit of absorbing seemingly endless additional costs. They will simply all be passed through to the consumer, ultimately fuelling inflation.

“The sector needs the Chancellor to reduce its tax burden through significant business rates reform tomorrow. We need to see the maximum possible business rates discount for all eligible hospitality properties and no hospitality venue hit by the surcharge.”

Calling the higher-than-expected increase to the rates for under-21s “worrying for hospitality businesses”, she added: “When there are almost a million young people not in employment, education or training, this will put further pressure on already fragile youth employment rates. Given the Government’s ambition to help young people back into work, this level of increase is concerning.

“Hospitality is a sector that offers opportunities for all, regardless of experience or background, and is uniquely placed to help tackle youth unemployment. This should be embraced and supported, rather than discouraged.”