John Vincent, co-founder of Leon, has claimed that Labour is totally killing the restaurant industry, according to major media reports. Official insolvency figures show that more than 1,000 restaurants are closing each year, with many more thought to be technically insolvent, though the exact number remains unclear. This has sparked criticism from industry leaders, but the government's specific response to these claims has not been detailed.
Employers across the UK have faced significant cost pressures from rises in the minimum wage, the national living wage, National Insurance contributions, and pension auto-enrolment. These policies have hit the hospitality trade particularly hard due to tight margins and staff shortages. 1% rise, adding to financial strain.
According to Philip Shaw at Investec, businesses have been subject to material increases in wage-related costs over the past year, specifically from hikes in the National Living Wage and employers' National Insurance Contributions. Pubs and restaurants, as heavy users of fuel for cooking and lighting, are experiencing additional strain from rising fuel costs due to the Iran war, though the precise impact on prices is not quantified. This geopolitical factor compounds existing financial challenges.
Businesses have been subject to material increases in wage related costs over the past year or so in the shape of increases in the National Living Wage and employers' National Insurance Contributions. In particular, because of the way that the hike in NICs was structured, firms in the restaurant and retail sectors, which are more dependent on staff on below average wage rates and part-time workers, have been particularly badly hit.
Industry examples highlight the crisis, with John Vincent returning as chief executive of Leon last year and closing more than 20 restaurants as part of a restructuring. According to Philip Shaw at Investec, firms in the restaurant and retail sectors, which rely more on staff with below-average wage rates and part-time workers, have been particularly badly hit. Labour has defended its policies, previously ruling out any U-turn by stating they were part of commitments to young people in its manifesto.
The British Retail Consortium said earlier this year that higher national insurance contributions, coupled with minimum wage hikes imposed since last April, had added £5 billion annually to the sector's costs, harming investment, pay awards, and employment. The retail sector is also facing a crisis, with M&S calling for a crackdown on brazen, organized, aggressive shoplifting, citing fear among staff and customers. Thinus Keeve, director at M&S, said that every day, more than 1,600 retail workers face violence or abuse, adding that this is not isolated, it is systemic and it is getting worse, not better.
Measures to address this issue have not been specified.