LPC changes branded 'disruptive & unhelpful'

This comes as the Government announced a new remit for the LPC, which asks for a National Living Wage (NLW) that should apply from April 2025, at a rate that does not drop below two-thirds of median earnings for workers aged 21 and over.

In a bid to deliver on its promise of a “genuine living wage” or working people, the Government said it had included the cost of living as one of the factors that must be considered.

However, the industry trade body warned the overhaul means the evidence already submitted would now be “out-of-date”.

UKH chief executive Kate Nicholls said: “Our staff are the lifeblood of hospitality and businesses are passionate about properly rewarding them for their crucial role.

Planning and budgeting 

“That’s why we agreed with the current remit of the LPC to maintain wage rates at 66% of median earnings, which will see the NLW increase at twice the rate of inflation.

“After all, this is the basis upon which hospitality businesses have been planning and budgeting.

“However, making significant changes to the remit for 2025 now is disruptive and unhelpful.

“Evidence has been submitted to the LPC on a basis that is now out-of-date. It would have been far more pragmatic to wait and make these changes in 2026.”

Operators have previously voiced concerns over the new Labour Government’s plans for employment reform​, including concerns around how the increase to the NLW would be possible for firms already struggling with the cost-of-doing business​ to deliver.

Delivering growth 

Nicholls implored the LPC not to recommend more “significant increases” to the NLW as this would raise further “serious questions” over affordability.

She continued: “With a new remit now in place, the LPC must recognise the 20% increase to wage rates over the past two years clearly accounted for the cost of living.

“As the Government recognises in its letter to the LPC, wage rates should be consistent with delivering growth for both staff and businesses.

“There now must be a fresh round of consultation with business groups before recommendations are made to ensure that balance is struck in an affordable manner, particularly in how it addresses changes to youth rates.

“It’s also the case business costs need to come down to offset rising wage costs, and that should start with the Government fulfilling its manifesto commitment to reduce the burden of business rates on hospitality businesses, as well as reducing employer National Insurance Contributions.”