What does an incoming Labour Government mean for the UK hospitality industry?
By Today’s general election will trigger policy changes with far-reaching implications for the UK hospitality sector. Labour ran and won on a platform of change, and the party’s manifesto made clear pledges to both UK business and their employees. Here, we take a look at some of the biggest promises UK hospitality operators should be focusing on.
Business rates
In April, Labour set out a 5-point plan to help rejuvenate the high street and support the small and independent businesses that rely on it. Among the measures listed was a reform of business rates.
Currently, business rates are based on how much annual rent a property can achieve, and hospitality operators bear a significantly higher burden than other businesses. Trade body UKHospitality’s Chief Executive Kate Nicholls puts the sector’s bill at “three times its fair share of rates” proportional to turnover.
While we don’t yet know what a new system will look like, the incoming government has promised that it will “rebalance the burden and level the playing field between our high streets and online giants.”
High street vacancies
Labour’s 5-point plan also includes provisions to reduce the number of vacant units on UK high streets. It will give communities a ‘right to buy’ assets in an effort to ensure buildings remain in use. While this will be welcomed by operators who benefit from the increased footfall of a vibrant high street, it has the potential to limit the amount of A3 property stock available if these units get snapped up for other uses.
National living wage
The new government set out plans for a fairer deal for working people in its Employment Rights Green Paper. A proposed increase to the National Living Wage will see it extended to ensure all workers are paid at least £10 per hour, essentially removing age qualifiers to provide a universal living wage.
While this change will level the playing field for younger workers and give them rights to equal pay, it could pose a problem for operators already struggling with rising costs and a highly competitive labour market. Payroll accounts for a significant portion of the sector’s running costs, and the last update to the national minimum wage in April has already increased the UK hospitality wage bill by an estimated £3.2bn.
Looking beyond this initial change, there are hints that Labour may link the National Minimum Wage to cost of living in the future, further increasing payroll costs for the sector. This will force operators to focus on efficiency to avoid costly overstaffing and ensure they offer the best possible employee experience to retain talent and remain competitive.
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Apprentice Levy
Expanding the National Living Wage to younger workers could theoretically disadvantage them, bringing their wage costs in line with those of more experienced staff.
Plans to reform the Apprenticeship Levy, also laid out in Labour’s Employment Rights Green Paper, could help to offset any potential disadvantages to younger workers by giving employers more flexibility in how they spend government apprenticeship grants.
Currently, businesses with a wage bill exceeding £3m a year pay a levy that partly funds apprenticeship; firms of all sizes can leverage this pot to help train apprentices. The proposed new rules will allow businesses to spend up to 50% of the levy funds they receive to fully fund apprenticeships and train existing staff. Labour estimates that companies using just 3% of the additional flexibility would create an extra 150,000 funded traineeships.
Workers rights
The new government is also proposing reform to other areas of employment law. It will outlaw zero-hour contracts and intends to increase statutory sick pay, removing the lower earnings limit and making it available to all workers.
Labour also plans to reform parental leave and promises a review of the shared parental leave system. It intends to extend maternity and paternity allowances and remove minimum length of service qualifications.
A mandate for change
Labour’s commitment to transformative change will undoubtedly impact the UK hospitality sector. While much is still unknown, the proposed changes aim to balance the needs of businesses and employees and should see UK operators gain additional support around business rates and staff training.
The exact impact of an incoming Labour government on worker rights and what this will mean for employers is still largely unknown. To discover how Fourth’s HR and Payroll platform can help your business stay abreast of any changes and remain compliant with new policies, contact us today.