Speaking at the Conservative Party Conference in Manchester on Monday 2 October, Chancellor Jeremy Hunt announced the NLW would be increased from £10.42 per hour to “at least £11”, equating to a pay rise for some 2m workers across the country.
However, a recent snap poll conducted by The Morning Advertiser revealed more than three-quarters of operators felt the increase would have a significant impact on their business.
Of the 264 respondents, 215 (81%) felt the rise would have a significant impact while 11% (30) claimed it would have a small amount of impact and just 7% (19) felt there would be no impact.
Managing director at The Three Hills at Bartlow, in Cambridgeshire, Emma Harrison, told The Morning Advertiser while pubs want to pay staff “well and fairly” for the “tough jobs” they do, there is “no room” in pub margins to pay employees more.
She said: “For the Government to announce yet another increase in the NLW without offering some form of offsetting financial assistance to pubs is a slap in the face to this important industry, which has fought so hard for the last three years to survive.
“This is not simply an increase for those on minimum wage - all wages will have to go up at the same time. Make no mistake about it - an increase in the NLW will be inflationary.”
Owner of the Unruly Pig in Bromeswell, Suffolk, Brendan Padfield, also warned pubs would not be able to absorb the increase and questioned how such increases would be paid for.
In addition, according to analysis of Government data by The Morning Advertiser, the NLW has increased by almost 40.5% in the last five years.
General manager at The Plough at Normanton-On-The-Wolds in Northampton, Becky Cassapi, explained the pub recently conducted a year-on-year comparison with its wage bills, which revealed the same month this year was around £1,000 higher than 2022.
She said: “This rise, as well as all the other increases for the sector, can’t just be added onto a pint of beer or the food menu, otherwise we would all be outpricing ourselves in an already delicate market.”
Cassapi added while there “must be a reason” for the increase and that staff should not be penalised, the Government needed to implement measures to help pubs “deal with cost pressures”, such as subsidising wage bills or reducing taxes.
“If VAT was lowered on food, it would help us afford more team members, helping the job market overall"
“As an industry, we have already seen the impact of the last increase of the NLW hit our pubs financials significantly.
“Controlling labour is always a key factor to running any pub, however these increases are out of our control”, she continued.
Furthermore, licensee of the Royal Dyche in Burnley, Justine Lorriman, cautioned the increase could lead to a surge in prices for consumers or a reduction in staff working hours to tackle a rise in wage bills.
“It is understandable the NLW is increasing again, everything seems to be going up in cost, so it only seems right that wages increase across the country as well.
“My staff work hard, and I am more than happy for wages to increase each year as they deserve it, but it becomes difficult when everything else within the business is increasing too”, she said.
Lorriman added the Government needed to offer “financial support” in the form of tax relief to assist the sector with growing staffing staff costs or supply funding for training courses to help enhance skill levels and account for higher wages.
However, Co-owner of Chesire Cat Pubs & Bars, Tim Bird, said while any cost increase posed a “challenge” for pubs, the sector must “face the facts” and the continuously rising cost-of-living “must be reflected in the NLW”.
He continued: “Costs are going up across the business and in the end, they will take their toll on even more less fortunate pubs. It seems like ‘death by a thousand cuts’ at present.”
Bird added the hospitality industry had been “guilty” in the past of asking “too much” of the Government but that there was “no better time than now” to ask for VAT to be lowered to “help the job market.”
He said: “The Government has helped with the discounts, but when you combine the fact that business rates will be returning to the highs of pre-pandemic next April 2024 with the NLW increases, and no doubt more outrageous increases from international brewers, then one has a problem.
“If VAT was lowered on food, it would help us afford more team members, helping the job market overall. Even if it was for a three-year period from April 2024.
“This is what we need to be asking for, as well as demanding the big brewers give us a break and hold their prices for a year or two.”