Chancellor Rachel Reeves will announce in tomorrow's Budget (Wednesday 30 October), the NLW will increase from £11.44 to £12.21 an hour, which the Government estimated is worth £1,400 a year for an eligible full-time worker.
The national minimum wage (NMW) for 18 to 20-year-olds will also rise from £8.60 to £10 an hour – a rise of more than 16% and the largest increase on record.
This £1.40 rise will mean full-time younger workers eligible for the rate will see their pay boosted by £2,500 next year.
It marks the first step towards aligning the NMW and the NLW to create a single adult wage rate, which would take place over time, according to the Government.
UKHospitality chief executive Kate Nicholls stated the hikes were "well above expectations", making the Budget "even more important".
Collateral damage
She said: “It’s an added £1.9bn to the hospitality wage bill, on top of the cost of the Employment Rights Bill and, if rumours about the Budget are true, employer national insurance contributions and business rate rises.
“Trying to balance the books from the pockets of high street businesses will simply leave hospitality as collateral damage – threatening jobs, future investment, price increases for consumers and business viability.
“Businesses will be approaching tomorrow’s Budget with even more trepidation following this news.
“Our companies desperately want to support higher wages for staff but what is being asked of them is simply unsustainable if taxes are going to shoot up at the same time.”
Nicholls reiterated calls for support on business rates in tomorrow’s fiscal announcement by the Government.
Cost burden
“In light of this, it’s paramount the Budget includes targeted measures to support the high street and the cost burden it is facing,” she said.
“That must start with addressing the broken business rates system and implementing a lower, permanent and universal level for hospitality.”
Just a few weeks ago, industry chiefs warned rising wage costs were threatening to become the biggest challenge for pub operators.
Liberation Group CEO Jonathan Lawson called for a stronger challenge to NLW increases at The Morning Advertiser’s MA Leaders Club conference earlier this month (October).
Earlier today (Tuesday 29 October), one Suffolk operator highlighted the tumultuous trading landscape facing the sector.
Owner of the Unruly Pig in Bromeswell, which is currently the number one Estrella Damm Top 50 Gastropub, Brendan Padfield said: “There are times where any of us in hospitality just wonder whether it is all really worth it. This week is one of those times."