Budget 2024: 'Imagine the grim prospect of your favourite restaurant or pub closing forever'

Operators and trade bodies are warning that more pubs, restaurants, bars and cafes will close in light of today’s announcement that includes increases to minimum wage and increases in national insurance contributions for employers

Ahead of the budget, Manchester-based Simon Wood, who was recently forced to close his city centre restaurant Wood, took to social media to express concerns at what the budget announcements will mean for the sector. 

Wood wrote on X: “Each of us has our favourite restaurants or pubs that evoke feelings of happiness and safety, places that remind us of cherished moments. Now, consider the grim prospect of these venues closing their doors forever. 

“The repercussions on our society and individual well-being would be devastating. Humans need joy and leisure to feel fulfilled. From high achievers in professional realms to young individuals embarking on their journeys, we all require balance in our lives. It is balance that empowers us to thrive and experience true happiness. 

"Significant challenges have beset the hospitality sector in the UK in recent years. The situation surrounding energy prices alone is nothing short of a scandal, as our so-called regulatory bodies stood idly by while businesses collapsed. And don’t get me started on VAT; it seems as if there is an aim to stifle entrepreneurial spirit in this country. I stand ready to advocate for and defend my industry.”

The Chancellor confirmed that minimum wage will increase by 6.7% from £11.44 to £12.21, alongside a 16% increase in minimum wage for 18-20 year-olds to £10. Rachel Reeves also announced that the current business rate relief will be extended but reduced. The Chancellor said that there will be a 40% relief in 2025/26 for retail, leisure and hospitality businesses up to a cap of £110,000 per business. 

Elsewhere, the Chancellor said that draft duty will be cut by 1.7%, meaning a reduction in one penny per pint. At the same time, however, alcohol duty will rise in line with RPI.

In a statement released after the budget announcement, UKHospitality Chief Executive Kate Nicholls described the budget as a “blow” for the hospitality business. She said: “Rising taxes, increasing costs and fragile consumer confidence risk bringing growth to a grinding halt. In the short-term, the tsunami of employment costs coming in April will ultimately do more to hamper growth than incentivise it. Increases to employer NICs and wages will make it harder for businesses to support employment and invest in their businesses.

“Avoiding the business rates cliff-edge next April was critical and it was important that some relief has been extended. However, the reduced level of 40% is another cost that businesses have to deal with. For those small- and medium-sized operators, their rates bills will still go up in April. All of this means that 2025 will be painful for hospitality, with an increased annual tax bill of £3 billion for the sector.”

However, Nicholls adds that there is reason for cautious optimism in the long-term. She added: ““However, there are reasons for longer-term positivity. I am pleased that the Chancellor is implementing UKHospitality’s recommendation for a permanently lower level of business rates for hospitality. Levelling the playing field in this way recognises the importance of the high street and the role it plays in our communities and economy. We need to see the detail and the Government must work with the sector in the design and delivery of this significant change to get it right.”