Hospitality Operators Press Chancellor to Reverse NIC Hike Before Budget

Employer National Insurance rises that took effect in April 2025 have forced tens of thousands of UK hospitality job cuts, according to sector leaders now pressing Chancellor John Healey to reverse the measure in Wednesday's Budget.

Healey delivers his first Budget this week and has refused to rule out tax increases, after acknowledging government borrowing costs sit at "historic highs." Tourism and hospitality leaders have warned that any further taxation or financial pressure would "hinder growth."

Katie Warren, chair of the Cornwall Visitors Alliance and owner of a self-catering holiday let business in Falmouth for 15 years, said the sector is watching "with absolutely bated breath."

What are operators asking for?

The industry's wishlist is specific: cuts to VAT, cuts to small business rates, and a rollback of the National Insurance changes announced in Labour's first Budget in 2024.

Warren didn't hold back on the NIC impact. She called it "absolutely diabolical for the sector" and said "tens of thousands of jobs have been cut across the UK since the changes came in."

Her assessment of the closures is blunt on the economics. "Businesses have had to close because they could not meet those overheads along with the constant rise in operational costs," she said.

Where does VAT fit into the margins?

The VAT argument is a labor-cost story, not a taste story. Chris Thomson, owner and founder of 10 Over Surf Shop in Newquay — a site that also hosts a café, a barbers and a marketing agency — laid out the mechanism.

"The highest cost for hospitality is staff wages and you can't reclaim VAT against that," he said. "So lowering the VAT rate to 10% would just give us a bit more margin to improve the business and invest in our team."

That's the core problem: input VAT recovery doesn't touch a hospitality operator's biggest expense line. A 10% rate, in Thomson's framing, functions as a direct margin injection for reinvestment and staffing.

He described starting a small business as "tough" — something that "constantly feels like an uphill battle."

What does this mean for youth hiring?

The staffing question runs deepest at attraction operators. Roger Sell, general manager of River Dart Country Park near Ashburton in Devon, employs about 100 staff depending on the season — and roughly 30% of them are under 18.

Sell, who also chairs the Devon Association of Tourist Attractions, wants Budget measures that encourage youth employment. His reasoning ties training costs directly to the tax structure.

"Employment in our sector is huge and we're in the customer service business, so we have to employ in the right way, and we have to do a lot of training with our staff," he said. "So anything that is putting a restriction on us employing, like the National Insurance contributions, is having a massive effect in the tourism sector."

For a park where nearly one in three workers is a minor, employer NIC burdens land squarely on the entry-level pipeline the sector depends on.

What happens Wednesday?

The Chancellor has given himself room to raise taxes, and the sector's three asks — VAT relief, business rates cuts, an NIC rollback — all carry real fiscal cost. Warren's "bated breath" framing reflects the stakes: operators say another round of increases, layered onto the April 2025 changes, would push more closures into a sector already cutting jobs at scale.