Hospitality warns of ‘mounting pressures’ amid Budget measures

Hospitality and high street groups have warned that the autumn Budget announcement will place renewed pressure on pubs, restaurants, night-time venues and accommodation providers, despite the government confirming a 5p reduction in the Retail, Hospitality and Leisure business rates multiplier.

Industry bodies said wage increases, tax measures and steep rises in rateable values would outweigh the benefit of the reduced multiplier from April. Several organisations said job opportunities, investment plans and business viability were now at risk.

Kate Nicholls, chair of UKHospitality, said: “Wage rises, holiday taxes and monumental increases in rateable values have put even further pressure on hospitality businesses, as a result of this Budget.

“A 5p business rates discount is simply not enough to offset these costs and redress the damage it will do to business viability and job opportunities. Once again, the government is trying to balance the books disproportionately on the backs of the high street – and risks creating a two-tier economy.”

The trade body added that accommodation firms were facing a 76% rise in rateable values, with pubs up 30% and restaurants and cafés up 14%. It warned that the combined effect of payroll costs, tax changes and rates pressures would reduce employment prospects, particularly for young people.

Concerns were echoed in the pub and restaurant sector. Stephen Owens, managing director for pubs and restaurants at Christie and Co, said: “Overall, there was little to cheer about from the Chancellor’s Budget so far as pubs and restaurants are concerned. 

“Whilst the plans to introduce permanently lower multiples on business rates is to be welcomed, it is not as great as had been hoped for, and will be partly offset by increased payroll costs through rises in the National Living and Minimum Wage. Maintaining wage differentials will get more difficult, reducing margins, so increased menu prices and reducing trading hours may be the answer for some.”

Champa Magesh, managing director of Access Hospitality, meanwhile said the Budget represented a “lost opportunity” for growth. 

She said: “Those business rates delivered today, coupled with frozen Income Tax and NI threshold, provide momentary benefit; however, the effects of minimum wage increases do not ease the pressure felt by businesses.

“These budget announcements could push hospitality businesses to make difficult decisions that they will not want to make.”

Springboard, the hospitality training and employability charity, warned of potential long-term workforce shortages.

Chris Gamm, chief executive of Springboard, said: “We expect entry-level hospitality roles to decrease and further job losses to follow. This will put immense pressure on the sector and on charities like Springboard, which are committed to training and supporting people into work.”

Stronger criticism came from the night-time sector, Michael Kill, chief executive of the Night Time Industries Association, said: “This Budget is a hammer blow to an already fragile night-time economy. Its impact will be felt across every high street and town centre in the UK.

“A 4.1% increase in the minimum wage to £12.71 may sound positive on the surface, but when coupled with an 8.5% rise for eighteen to twenty year-olds, it presents a serious challenge for a sector that employs a large proportion of young people.”

While industry groups focused on the wider cost implications, analysis from tax firm Ryan highlighted the effect of business rates changes on smaller operators. The firm said the shift from the current 40% Retail, Hospitality and Leisure (RHL) discount – ending on 31 March 2026 – to a permanent 5p lower multiplier would substantially reduce support from next year.

The firm added that the existing discount would cost the Exchequer £1.385bn in 2025/26, while the new 2.8p supplement on properties with a rateable value above £500k would raise £965m in 2026/27, leaving a £420m gap in support.

Its modelling showed a typical small shop’s rates bill rising 42%, pubs up 66% and restaurants increasing 45%, driven by higher rateable values under the 2026 Revaluation.

According to the firm, the combination of rising valuations and reduced relief meant that business rates bills will rise sharply for small and independent operators next April.