Already struggling under the weight of increased national insurance and minimum wage costs, the hospitality sector was praying for help from the recent Budget.
Instead, pubs, restaurants, hotels and retailers were met with increases to the national minimum wage, and in many cases higher business rates, despite the Chancellor promising to provide relief.
Now Rachel Reeves faces a backlash over business rates raids from hospitality firms over her ‘misleading’ claims to have cut them to 1991 levels.
She announced she would ‘permanently lower tax rates for over 750,000 retail, hospitality and leisure properties’ and pay for it by hiking taxes on larger properties.
But after her speech, many small businesses realised that their bills would actually go up. Read more
For many businesses, not annihilated by Reeves’s first Budget, this will mean a struggle to survive.
Here, four business owners tell the Daily Mail and This is Money about the scale of the challenges they now face.
Budget blow: Already struggling hospitality firms now face increases to the minimum wage, and in many cases higher business rates, despite the Chancellor promising to provide relief
Budget landed like the final body blow
Eddie Nelder, 61, from near Blackpool, is the owner of Choice Hotels, a family business overseeing five hotels in the North-West, that grew from a modest boarding inn in Birmingham at the end of the Second World War to establishments across Blackpool and the Lake District.
Mr Nelder said: ‘We’ve seen our share of ups and downs in that time, but I can honestly say it’s never felt tougher than it has over the last few years.
‘We’ve told successive governments that we simply can’t survive the way things are going — and this recent budget has landed like the final body blow.’
He points out that surviving the pandemic was challenging but since then, rising utility bills and wage pressures, including last April’s NI and minimum wage increase, have left his business close to the edge.
‘Last April’s announcement cost us £600,000, pushing our operating costs up by £3.2million in the last five years. With a turnover of £20million, that increase has quite literally wiped out our profit.’
Tough times: Eddie Nelder, 61, from near Blackpool, is the owner of Choice Hotels, a family business overseeing five hotels in the North-West
The hotel owner explained that as a result, his initial reaction to the chancellor’s announcement about a further increase to the minimum wage, was pure disbelief. ‘That means finding another £300,000 a year.’
He said: ‘We run at 90 per cent capacity year-round, so it can’t realistically come from more guests.
‘And it won’t come from redundancies either — we’ve already made twenty staff redundant and are working on a shoestring, running lean. So the only option left is to cut whatever else we can, wherever we can.
‘The future feels so bleak that I’ve been waking up asking myself what the point of it all really is. I work 80 hours a week, but more hours can’t fix a business model that keeps being pulled apart from the outside in.
‘We’re proud of what we built, and we want to keep building — not just for us, but for the communities that grew with us.
‘Right now, it feels like we’re fighting for survival alone. I just wish the people making the decisions could see what we see: businesses like ours don’t just serve people, we hold ecosystems together.
‘If we fall, many fall with us. And that’s not a future anyone should accept willingly.’
No choice but to pass on costs to customers
James Nye, 44 from Hitchin, oversees ten pubs in the East Anglia region, and with margins already razor thin, is concerned about the future under Rachel Reeves.
Mr Nye said: ‘When we emerged from the Covid pandemic, we thought we’d endured the worst that could be thrown at us. We were wrong.
‘What we’re facing now is far harder, because at least during Covid we had recognition and meaningful government support through furlough and business loans.
‘Now it feels like the government are piling on pressure at the very moment we need their backing most.’
Rising costs: James Nye from Hitchin, oversees ten pubs in the East Anglia region
The Managing Director of the thirty-year-strong family business explained: ‘What will truly scupper us now is the 8.5 per cent uplift in the minimum wage for 18-to 20-year-olds to £10.85. We were already grappling with last year’s National Insurance and minimum wage rises.’
He points out that like all responsible business owners, he wants to pay his teams as well as he can.
‘But the reality is that shrinking margins mean this may end up disincentivising us from employing young people at all. That’s a real shame, as pubs like ours are major employers of youngsters.
‘We’ve had remarkable success stories, watching talent flourish to the point where twenty-somethings manage large budgets and lead thriving teams.’
A budget meeting this morning only served to underline his fears. ‘I saw our costs will rise again next year,’ Mr Nye explained.
‘The only realistic way to absorb it is passing costs to customers — yet footfall is already falling, because people can’t afford to go out as often.’
Meanwhile, he remains baffled by Rachel Reeves’ claims that pubs will pay lower business rates. ‘I honestly cannot understand how she can claim this, as everyone I know is paying more,’ he says.
‘We know what that means: pubs closing at a rate of two a day. That creates less revenue for government coffers and leaves a deeper hole in communities.’
‘Labour doesn’t understand rural communities’
Together with his wife Jane Tyler, 72, Mark Goodey, 69, runs two café-restaurants in the south-west, the Winking Prawn and the Cracking Crab.
Mr Goodney said, ‘I’ve long believed that as a political party, Labour don’t understand anything south of Bristol, particularly rural communities, and this latest budget has only reinforced that view.
Fresh challenges: Husband and wife team Mark Goodey and Jane Tyler run two café-restaurants in the south-west, the Winking Prawn and the Cracking Crab
A three generation family business – their son and daughter Lucy and Luke Culkin, 43 and 41 also work in the cafes, along with their 20-year-old granddaughter Bella – they say that having been in the trade for thirty years it’s never been harder.
‘Like many in hospitality, we’ve been battling ever-decreasing margins caused by spiralling rent, rates, and wage costs,’ Mr Goodey explains.
‘However, last year’s rise in National Insurance was a real blow, not least because we had no chance to plan for it.
Heading into this year’s budget, we clung to hope around the rumoured rates reduction, only to find that the rateable value of both our sites has increased.
So we’re worse off, and that’s before factoring in the minimum wage rise for 18- to 20-year-olds.’
In their case, while all staff aged 21 and over are already paid above the minimum wage, the expectation now is that 18 to 20-year-olds will receive the full minimum wage, regardless of capability or experience.
‘That’s a major challenge with new seasonal hires,’ Mr Goodey says. ‘It also makes protecting pay differentials for older staff far harder.
‘I know the government wants to promote apprenticeships, but apprentices need twelve months of stable employment, which we simply can’t offer.’
It has left both he and his wife worried about the challenges facing their children who will eventually take over altogether. ‘We can’t run it for ever and I do worry what the future holds,’ he says.
‘Minimum wage hike means we can’t hire anyone
Hasna and Shahid Vakkayil, run a convenience shop at a filling station near Sawtry, Cambs.
Mr Vakkayil, 43, said of his wife: ‘Hasna worked as a research associate at a university before we decided to take on the lease of the shop.
No help: Hasna and Shahid Vakkayil, run a convenience shop at a filling station near Sawtry, Cambs
‘We saw it as a challenge – the area is very quiet, and it looked like it was going to shut down which would have been a disaster for locals who would have to travel miles to get a pint of milk.
‘We wanted to try and turn it around, but I didn’t realise quite how hard it would be. While I have business experience, the margins are so small – we only earn around £40,000 a year between us.
‘We can survive on that – just – but the hike in the minimum wage means we can’t afford to employ anyone at all.’
The store owner points out that as parents to Dilawar, seven, and Dilhan, three, the couple are limited in terms of the hours they can put into the shop.
‘We’d love to open more, but we have a family to look after, so that in turn affects what we earn,’ he says.
‘I wish the government would give people like us more support. We really want to contribute, but things just get harder.
‘Our request for a bus stop near here to increase footfall is met with stonewalling. So it’s a struggle, but we will do our best to open this shop for the public as much as we can.’
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