UKHospitality: Spend, spend, spend?

It’s unfortunately not long now until contract caterers, as well as the rest of the sector, are hit with April’s £3.4bn cost increase, a large chunk of which is down to the employer National Insurance Contribution (NIC) threshold reduction. It’s a potentially catastrophic blow for an industry with the potential to regenerate high streets, get people back into work and kick-start UK economic growth, as we’ve seen proof of in the past two months’ gross domestic product figures where hospitality has been one of the biggest contributors of growth.

So, as part of UKHospitality’s submission to the government’s 2025 spending review – setting spending plans for a minimum of the next three years – we’re urging government to delay the threshold changes. This will allow time to assess their impact on part-time and flexible employment, plus workforce returners, and spare the sector significant amounts of economic pain that will pump the brakes on any further growth potential. This is important because, as well as the NIC changes, contract caterers and the wider sector face further costs with the 2026 introduction of the Employment Rights Bill.

'Missions and objectives'
Our spending review submission focuses on how hospitality can help deliver the government’s missions and objectives: growth, employment and skills, infrastructure, taxation and government structures, including increasing funding for public sector catering. This last matter is significant because restrictions on public sector catering spending have seen a big reduction in the funds available for quality public sector food, threatening the effective functioning of the likes of schools, hospitals and prisons.

School meals offer a prime example, as funding for provision has dropped dramatically during the last decade, lagging behind key input costs such as labour and food. We want to see the government overhaul the school meals system by increasing the per-meal funding allowance to around £3.50 and ensuring school meals funding is ring-fenced, with any surplus being returned to government. We also propose expanding free school meals eligibility to those children whose parents receive Universal Credit. We believe these measures should be accompanied by a wider review of all types of public sector catering funding, to ensure it’s set at the correct level.

While the spending review, which is set to conclude June, focuses on government expenditure, the level of that expenditure depends on consistent growth across the economy, and hospitality is keen to play a leading role in delivering that growth. After all, we already pump around £54bn into treasury coffers every year.

However, we won’t be able to do that if hospitality continues to be held back by a tax burden higher than any other sector. This is we’re proposing a joint hospitality industry and government review of the overall tax burden, to establish a level that promotes growth while at the same time supporting government finances.

And we mustn’t forget the hot topic that is net zero, because as well as the broader public infrastructure, businesses need to consider their own infrastructure changes as these targets loom. But after five years of turmoil and strife, hospitality businesses’ ability to invest in net zero essentials is incredibly limited, and certainly some way short of our sector’s level of ambition. Therefore, we’re proposing that the government sets up a hospitality-specific green investment fund to encourage implementation of decarbonising technologies.

The spending review was originally scheduled to conclude in April. The delay until June has at least given us more time during which to press the government for changes to the likes of NICs which, in their current form, threaten to do untold damage to thousands of hospitality businesses, contract caterers included.

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