Speaking outside 10 Downing Street this morning (Monday 22 June), Starmer announced he would be stepping down as both Prime Minister and leader of the Labour party.
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It comes less than two years after he was elected into office in July 2024, ending 14 years of an tumultuous Conservative Government.
Starmer instructed Labour officials to begin the process of choosing a new leader, with nominations opening on Thursday 9 July and the contest due to conclude before Parliament breaks for the summer on Thursday 16 July.
During the emotional address, the outgoing PM said his Government had “delivered change”, but that the “question being asked now” was around who was “best placed” to take the party into the next general election, adding he “accepts the answer with good grace”.
During his time in Downing Street, his premiership introduced a series of employment reforms, oversaw increases to wage costs and pledged support for high streets and economic growth, with many policies having had a direct impact on hospitality businesses.
One of the most significant changes for hospitality came in April 2025, when the national living wage rose by 6.7% to £12.21 an hour, increasing labour costs for pub operators across the UK.
Key issues
Employer national insurance contributions were also increased under Starmer’s Government, raising payroll costs for businesses and adding further pressure on labour-intensive sectors such as hospitality.
The rate increased from 13.8% to 15% and the threshold at which employers begin paying contributions was also lowered.
While the Government said the changes were part of a broader effort to stabilise public finances, the decision was heavily criticised by hospitality operators.
Starmer also oversaw a series of employment law reforms aimed at strengthening workers’ rights.
For hospitality operators, this meant closer attention to issues such as contracts, working hours and job security, with many businesses warning the changes would reduce flexibility in a sector that relies heavily on part-time and casual staff.
Business rates reformation was also a key issue throughout Starmer’s time in office.
While the Government signalled support for high streets and local businesses, it has so far stopped short of overhauling business rates, instead relying on short-term reliefs and longer-term reform pledges.
Operators have continued to argue the overall tax burden on hospitality venues remains high, particularly compared with online businesses.
Calls for VAT reductions have also been central to Starmer’s leadership.
While Chancellor Rachel Reeves announced a temporary VAT cut on children’s meals this summer, the move faced criticism, with voices across the sector stating it did little to offset wider pressures.
Alcohol duty remained largely unchanged under Starmer’s Government, with only modest reductions on draught products and continued inflation-linked increases across most other drinks.
Though pubs and the wider hospitality sector have continued to feel the impact of cautious consumer spending over the past two years.
Tight margins
Even as inflation eased from earlier peaks, customers remained careful with discretionary spending, which kept pressure on sales in the on-trade.
Elsewhere, Starmer secured new and updated trade agreements with several international partners during his time in office.
For hospitality, these deals were seen as a potential long-term benefit, particularly for supply chains covering food, drink and imported ingredients, although operators highlighted the impact was still limited in day-to-day trading.
While operators continued to face high costs, Starmer’s Government backed high street regeneration, signalled support for more competitive tax treatment between online and bricks-and-mortar businesses and pursued trade policies aimed at improving long-term supply chain stability for food and drink businesses.
As Labour prepares to elect a new leader, attention in the hospitality sector will quickly turn to what direction the next Prime Minister takes on key issues such as business rates, employment costs and support for high streets.
For pubs still operating under tight margins and cautious consumer demand, the leadership change will be closely watched for any shift in policy that could ease pressures or reshape the operating environment for the on-trade.
