Poll: how much of an impact will the NLW rise have on your pub?

04-Oct-2023 - Last updated on 12-Jul-2024 at 14:07 GMT

Scoring political points: NLW increase will further squeeze margins and viability (Credit: Getty/Zedelle)

Earlier this week Chancellor Jeremy Hunt announced an increase to the National Living Wage (NLW), but how much of an impact will this have on your business? Vote now in our poll to have your say.

Night-Time Industries Association (NTIA) CEO Michael Kill described the increase as an "attempt for the Chancellor to score political points at the sector’s expense" as hospitality businesses fight to survive.

Speaking at the Conservative Party Conference in Manchester on Monday 2 October, Chancellor Jeremy Hunt announced the NLW would be increased from £10.42 per hour to “at least £11”, equating to a pay rise for some 2m workers across the country.

However, Kill said while the sector supports “fair wages”, the increase was “disappointing” and “nothing short of a slap in the face” for businesses that are “already struggling”.

“The timing couldn't be worse. It's a cynical attempt to score political points at our expense.

“We see [the announcement] as a token gesture that's timed at our industry's expense.

“The night-time economy has been battered by the pandemic, with our venues facing closures, restrictions, and crippling financial losses.

Struggling to survive

“Now, just as we're trying to get back on our feet, the Chancellor decides to unload the burden of a wage increase squarely onto the shoulders of operators”, he said.

According to analysis of Government data by The Morning Advertiser, the NLW has increased by almost 40.5% in the last five years.

Owner of the Unruly Pig in Bromeswell, Suffolk, Brendan Padfield, warned pubs would not be able to absorb the most recent increase to the NLW, stating there is a “cost and consequence” to everything.

“Just like doctors, nurses and a whole host of other hard pressed and highly valued workers, the obvious question is how will such further increases be paid for?”, Padfield added.

Kill added the NLW increase “eroded” any positive impact from the current business rates support and called on the Government to “engage” with the NTIA to discuss a “sensible, phased approach” to wage increases.

He continued: “[This move] shows a complete lack of understanding of the night-time sector's fragile state.

“We call on the Government to engage with the NTIA and other stakeholders in our sector.

“Our industry is struggling to survive, and we need a Government that truly understands and supports us.”

Squeezed margins

In his speech, Hunt said the Government was focused on “bringing down inflation”, adding the level of tax was currently “too high”.

The Chancellor also announced the Government would look at the way the benefits sanctions regime works as well as a freeze to civil service hiring, which he said would save £1bn a year.

UKHospitality (UKH) chief executive Kate Nicholls said addressing cost pressures on the sector was the “bare minimum” businesses need from the Chancellor in the upcoming Autumn Statement.

“A commitment to extend business rates relief and freeze the multiplier is essential to avoid a billion-pound bill that could tip many businesses over the edge”, she urged.

Nicholls added wages had risen by 12% in the sector over the last year, according to a recent UKH member survey.

She continued: “The people that work in hospitality are the lifeblood of venues across the country and it is right that they are paid fairly for their valuable work.

“Businesses in the sector strive to do just that but there will be concerns an increase in the NLW is yet another cost that will further squeeze businesses margins and, ultimately, viability."