Northumberland hospitality businesses react to the Budget

Chancellor Rachel Reeves announced changes to minimum wage, national insurance and schemes that directly impact the hospitality sector, with national minimum wage for adults over the age of 21 increasing to £12.21 per hour and employer’s National Insurance Contributions (NICs) is rising to 15 percent.

The business rates relief scheme is being extended but previous the 75 percent reduction capped at £110,000 per business will drop to 40% for the 2025/26 tax year.

Kate Nicholls, chief executive of UKHospitality, said: “This Budget is the latest blow for hospitality businesses. Rising taxes, increasing costs and fragile consumer confidence risk bringing growth to a grinding halt.”

In response to the Budget, Jessica Ainslie, manager of the Potted Lobster in Bamburgh, said: “It's very difficult at the moment anyway to try and get people into the sector because it's quite antisocial hours, so if they're going to get paid well elsewhere with more sociable hours they'll go for that.

“The staff that we've got currently will have their wages go up but it's just going to cause more problems in pricing. Customers will comment on the prices and are expecting more for their money, but unfortunately there’s such fine margin with what we can do as a business.

"Because we had such a boom during and after Covid, a lot of businesses were getting more staff in place, but now it's dwindling a bit and people aren't going to be able to afford to eat out because of how high the prices will have to be to cover the cost of everything else.

“It's just quite unnerving. Business owners especially expected a bit more from the Budget.”

The Chancellor announced the employment allowance will increase from £5000 to £10,500, but there are growing concerns on whether this is enough to cover the rise in wages, national insurance and business rates.

Mark Jones, owner of The Dirty Bottles, Backyard Beachclub and Crux in Alnwick, said: “Strategy will definitely be hit by it in terms of the changes that have been made.

"We're estimating that we're looking at about 60 or 70 grand reduction in profit because of those measures, so that will then have an impact on our investment strategy – investing in the building and the town.

"It wasn't a good Budget for small businesses. I think most of them will be saying the same.

"We welcome any increase to get the low earners earning more and being able to have a better standard of living, but realistically that has to be subsidised somewhere.

“We would like that to have been from the government with some incentives, whether that be a reduction in VAT or the hospitality rate relief.

"There's always this misconception that if people's wages go up then they spend more money in your establishment but that's just never really the case, unfortunately because any wage increases tends to get gobbled up in increases elsewhere.

"We certainly won't be making any changes to our staffing levels but we probably will be looking at areas we can be more efficient, whether that be with power consumption or using our high turnover for bargaining power with suppliers to try and get beer or fish a bit cheaper. Keeping our quality staff happy is key to our strategy going forward.”