To: The Chancellor of the Exchequer and HM Treasury

From: Access Hospitality and UK Hospitality Operators

The UK’s pubs, restaurants, hotels, and visitor attractions are places where memories are made, where communities gather and celebrations happen. The hospitality sector is the engine of grassroots growth, the heart of our high streets, and the biggest provider of entry-level jobs and accessible careers - employing 3.5 million people nationwide, contributing £140 billion GVA to the economy and generating £54 billion in annual tax receipts [1].

Yet, this vital sector is in crisis. Following a £3.4 billion cost shock [2], we’ve lost 84,000 jobs [3]; a larger portion than the wider economy. Favourite venues are closing and high streets are losing the vibrancy they need.

This decline isn’t due to lack of spirit - it’s the result of insufficient fiscal and employment support, combined with barriers to technology investment that could improve productivity. Local landmarks are being forced to close their doors.

We’ve submitted our formal recommendations for the Autumn Budget. Together, with our customers, partners, and employees, we are calling for two strategic interventions that will unlock this sector’s enormous potential.

Our Two Calls: Protect our People. Fund our Future.

Protect Grassroots Employment

Hospitality is the backbone of local employment. However, recent tax policies – particularly the lowered employer NICs threshold – punish businesses for hiring part-time staff. This unfairly impacts people seeking their first job, flexible work or transitioning from welfare. These are individuals who need support most, and hospitality has traditionally provided environments where they can flourish.

Already, this policy has dragged 774,000 workers into a punitive tax bracket [4] and likely prevented many more from gaining employment.

We ask for relief that safeguards these workers:

Implement a lower NICs band (£5,000–£9,100) at a lower 5% rate for part-time earnings, OR

Immediately grant exemptions for young people and those moving from welfare-to-work.

This protects vulnerable workers, while limiting increased employment costs, which force one third of venues to operate at a loss [5].

Protect our High Streets

The high street is intrinsic to UK culture, with 98% of us saying we’d care if our local high street vanished [6]. Yet, they are slowly dying. Approximately two hospitality venues closed every day [7] for the first six months of 2025, and a further 1,100 pubs and restaurants have shut their door since the April 2025 budget [8].

Many of these are local businesses who are either small, independent operators or part of national brands but either way they are struggling to survive, resulting in homogenous high streets and lost local identity.

High inflation, increased employment costs and rising business rates are driving this decline. While we commend the Government’s introduction of permanently lower rate multipliers for Retail, Hospitality and Leisure (RHL) from 2026/27, setting favourable rates is crucial.

Favourable rates will enable the hospitality sector to:

Curb insolvencies and job losses through immediate cash-flow relief.

Incentivise high street investment in refurbishment, equipment and expansion.

Provide stability and planning certainty for multi-year investment commitments.

Enhance local competition, helping smaller venues remain viable community hubs.

To help high streets compete internationally and address the £46.1M tourism deficit [9], we also ask the Government to review VAT rates and provide a roadmap to reduce hospitality VAT in line with European counterparts.

A VAT cut has upfront costs, but a review would demonstrate that a reduced rate (e.g., 12.5%) would deliver net fiscal gains over 10 years by increasing tourism, boosting sales, and creating jobs that generate income tax and NICs. Critically, VAT reform would drive new revenue into coastal towns, regional cities, and rural areas most dependent on the visitor economy.

Fund our Future

Technological change offers significant opportunities for productivity and innovation. Yet, hospitality is unfairly excluded from modernisation schemes that could save it, like Made Smarter, forecast to deliver £276 million [10] contribution to the economy.

We ask the Government to:

This simply requires extending existing scheme eligibility and ring-fencing funds for SMEs to adopt cloud-based POS, centralised scheduling, and inventory systems. As a labour-intensive sector with high potential for marginal gains, hospitality could benefit significantly from the £3.25 billion Transformation Fund. International data proves these funds generate substantial returns—Germany achieved 13:1 ROI in efficiency gains [11].

Digital transformation will increase productivity while helping meet net-zero targets by minimising waste and energy through AI-powered inventory, food, and energy management systems.

Government has supported the automotive, creative, and manufacturing industries to thrive through strategic investment. The hospitality sector—with its energy, people, and proven economic impact—deserves the same commitment.

We urge the Chancellor to view these measures not as costs, but as strategic investments that will save the heart and soul of every high street and community across the United Kingdom.

References

[1] Economic Contribution of Hospitality - UKHospitality

[2] UKHospitality Responds to the Budget - UKHospitality

[3] Hospitality Job Losses to Reach 111,000 by Budget - Dine Out Magazine

[4] 774,000 Hospitality Workers Dragged into New NICs Threshold - Facilitate Magazine

[5] One-third of Hospitality Businesses Now Operating at a Loss - British Institute of Innkeeping

[6] A Brief History of the High Street - English Heritage

[7] Hospitality Market Monitor 2 - NIQ

[8] Britain Loses More Than 1,100 Pubs and Restaurants in Wake of Budget - The Telegraph

[9] Travel Trends 2024 - Office for National Statistics

[10] Made Smarter Backs 400th Technology Project Driving £26 Million Digital Investment for North West Manufacturers - Made Smarter

[11] Journal of Small Business Strategy, "Measuring the Success of Digital Transformation in German SMEs," research study analyzing SME case studies with calculated ROI metrics.