Whilst giving evidence on the commission’s consultation on the subject, the Association of Licensed Retailers (ALMR), British Beer & Pub Association (BBPA), and British Hospitality Association (BHA) highlighted increasing costs that threaten to undermine further investment in staff members and sector job creation.
Tipping point
ALMR chief executive Kate Nicholls said the eating and drinking out sector is one that has been characterised by “high levels of growth, strong community and high-street investment and record job creation” since 2010, with employment up 18%, with one in seven jobs created in the sector.
“However, that has slowed markedly over the past year to 18 months, partly as a result of economic and currency pressure, but largely due to increased regulatory costs, such as business rates, which are in danger of becoming unsustainable in the current trading environment,” she said.
Nicholls said that while 84% of businesses have found ways to absorb increased costs, the sector is “approaching a tipping point”.
“Many businesses do not have a cushion against any significant increases and the LPC must understand that large increases in wage rates will threaten future employment and investment,” she continued.
Cautious approach
BBPA chief executive Brigid Simmonds agreed, and said given the current “economic uncertainties and the big increases in costs” we need a “cautious approach”.
She said the national living wage cost the industry around £34m per year in 2016, with the increase to £7.50 this year adding a further £52m - an average of around £1,600 for every pub.
“We are also facing significant new costs in other areas, such as the 4% increase in beer duty in the Budget, auto-enrolment pensions, business rates, and the apprenticeship levy”, she continued.
“The LPC does need to weigh up all these factors carefully when setting rates.”
Struggling economically
BHA chief executive Ufi Ibrahim added: "The BHA urged the commission to be cautious in setting rates for the national minimum wage (NMW) from April 2018.
“As there is only one compulsory rate for all regions and nations of the UK, particular attention must be paid to those parts of the country which are struggling economically.
“While the cost pressures on businesses have been well documented, there are real risks to revenue from a weakening in corporate and consumer confidence. It is important that the industry’s growth – especially in employment – is maintained through a responsible NMW settlement."