The hospitality industry has warned that planned minimum wage increases announced in today's Budget will make it harder for businesses to hire staff and could force more venues to close.
The Chancellor is set to raise the national living wage, which applies to workers aged 21 and over, from £12.71 to around £13.20. The national minimum wage for 18- to 21-year-olds will rise in line with this, from £10.85 to around £11.27, according to reporting from The Times. This represents a 3.9 per cent increase and effectively ends Labour's manifesto pledge to bring the rate for younger workers into line with that for older workers during this parliament.
Hospitality bosses said the rises would add to mounting pressures already created by earlier increases to National Insurance contributions paid by employers. UKHospitality chief executive Allen Simpson, representing businesses including Hilton hotels and Greene King, said the reported wage increases 'represent a considerable additional burden that many businesses will struggle to absorb.' He called on the Government to use the Budget to reduce the sector's tax burden, warning that without action, 'operators will have less capacity to invest, create jobs and drive growth in communities across the country.' Former Pizza Express entrepreneur Hugh Osmond added that pubs and restaurants are major providers of first jobs and said the moves would 'put yet more hospitality venues out of business and further destroy our already decimated high streets.'
Retail leaders also raised concerns about the impact on younger workers and entry-level employment. Helen Dickinson, chief executive at the British Retail Consortium, said entry-level and flexible jobs are 'most at risk' and called for the Government to raise the National Insurance threshold to £6,000, up from the current £5,000. The Consortium estimates that National Insurance changes and minimum wage rises have together cost the retail sector £6.5 billion and 115,000 jobs since the threshold was cut from £9,100 in 2024 and the rate rose from 13.8 per cent to 15 per cent in April 2025.
Chancellor Healey acknowledged last week that there was a 'trade-off between the level of the minimum wage and the employment rate' and said he was 'acutely conscious' of the impact on young people's prospects. Businesses say these cost pressures will feed into higher prices for consumers and make it harder to create jobs across Britain's High Streets.
For UK businesses, particularly in hospitality and retail, higher labour costs combined with recent National Insurance increases mean less room to hire new staff or invest in stores and venues, potentially limiting economic growth.