How This Week’s UK Budget Deepens the Crisis
This week’s UK budget threatens to heap even more strain on an already fragile hospitality sector — a sector that warns this may be its hardest moment since the pandemic. For many pubs, restaurants, hotels, and cafés in Scotland, the cost burdens introduced last year are pushing businesses to breaking point.
Last year’s increase in employer National Insurance Contributions (NICs) has been sharply felt. With the employer NIC rate raised to 15% and the threshold for contributions slashed from £9,100 to just £5,000, many hospitality employers face dramatically higher wage costs. UKHospitality and other industry bodies estimate the total tax burden from the budget could reach £3 billion annually.
These additional payroll costs come on top of a significant rise in the National Living Wage, which recently climbed to £12.21 per hour. Together, these changes are squeezing already thin margins. Businesses say they face impossible choices: cutting jobs, reducing hours, or — worst of all — closing venues.
Some in the industry describe the current situation as “worse than COVID,” warning that the once-buoyant recovery could unravel. According to UKHospitality, Scottish Tourism Alliance and reports in Parliament, thousands of jobs have already gone. The STA have recently launched their manifesto with the Scottish Government election next year, read it here
As we head toward the Christmas season — a critical trading period — the pressure is twofold. On one hand, hospitality venues are more important than ever to communities. For many people living alone or feeling isolated, local cafés, pubs, and restaurants offer warmth, social connection, and mental health support. But on the other hand, the people who run and staff these venues are themselves under unprecedented stress.
Owners, managers, and teams face an especially cruel dilemma right now. They must juggle keeping their doors open and delivering the warm, welcoming environments that communities depend on — while absorbing soaring labour costs, managing staff absences, and trying to stay solvent. The rota becomes a delicate balancing act: ensuring enough cover to serve customers, while allowing team members to take time off to be with their own loved ones over the holidays.
That strain doesn’t just hit the bottom line — it hits mental health. When staff are stretched thin, burnout looms. And for business leaders who have poured their heart and soul into their venues, the burden of making cuts or letting go is deeply personal.
In short, we must remember to think of them — those who give so much to make hospitality a safe, welcoming space for others. Supporting hospitality isn’t just about protecting jobs or venues: it’s about preserving places of belonging.
Gordon McIntyre MBE
Founding Chairman
Hospitality Health