The monthly online
magazine for all
catering professionals
Essentially Catering Magazine

Catering news - For this month's news - View magazine »

BHA not pleased with announcement of new National Minimum Wage

BHA not pleased with announcement of new National Minimum Wage

George Osborne announced in the Summer Budget last Wednesday that a compulsory ‘new National Living Wage’ of £7.20 an hour will be introduced for over 25s in April 2016.

This will rise to over £9 an hour by 2020. Despite the Chancellor using the phrase ‘Living Wage,’ this is in practice a further 50p increase in the compulsory adult National Minimum Wage beyond the announced rise in October this year from the current £6.50 to £6.70.

For workers over 25, the NMW will therefore have risen by over 10% by April 2016. It is assumed that the other NMW rates, which go up on 1 October, will be unchanged on 1 April, so the hourly rate for 21 to 24 year olds will be £6.70, for 18 to 20 year olds will be £5.30, for 16 and 17 year olds will be £3.87, and for apprentices (aged 16 to 18, and, if 19 and over, in the first year of the apprenticeship) will be £3.30. In effect, there will be five age-related NMW rates. It is also assumed that the Accommodation Offset (of £5.35 a day from October) will continue to apply to all NMW rates.

Given that a quarter of the hospitality workforce is on the minimum wage and a significant further proportion earn between the NMW and the new ‘Living Wage’ rate, the impact of the Chancellor’s announcement on the industry will be considerable, especially when the costs of maintaining differentials are taken into account.

Ufi Ibrahim, chief executive of The British Hospitality Association, said: "Hospitality and tourism created one in five jobs in the last Parliament and is the fourth biggest industry in employment terms but there is more we can achieve with further support from the Chancellor.

“As an industry employing a large number of individuals earning more than national minimum wage and less than the proposed living wage, we have tried to have a constructive dialogue with HM Treasury on building towards the living wage without job losses. We were very surprised the Chancellor made this announcement without consultation. Despite the Chancellor trying to alleviate the pain with adjustments to corporation tax and employment allowances, these changes do not go far enough to reduce the impact on SMEs and mitigate potential job losses across the industry.

“On top of all these new pressures, our industry is at a serious disadvantage with other European countries where tourism VAT is on average 10%. We call upon the Government to lower VAT on accommodation and attractions to 5% to increase our market’s competitiveness and reduce costs to working families. A cut to tourism VAT could supercharge the economy with over £20 billion in foreign exchange earnings and domestic spending over the next 10 years.

“While we are analysing the potential impact of the Chancellor’s announcement, constructive dialogue with HM Treasury is now imperative to identify measures to counterbalance the Government’s ambitious agenda with the realities of running a high-service and very low-margin business."

Your feedback is important to us – please comment any time. Leave feedback »

Previous issues - For latest news & articles view this month's magazine »

Inside this issue

Sign up for more

Sign up today and get Essentially
Catering Magazine delivered every
month to your inbox.

You’ll also get:

  • Weekly news updates
  • Exclusive catering product offers
Sign up »
Advertisement BB Foodservice
Follow Essentially Catering Magazine on Twitter

Essentially Catering @MagazineEC 15 NOV

Well done, Jerome Calayag From Sweden Announced As The Winner Of S.Pellegrino Young Chef Regional Semi-Final, And W…

Essentially Catering @MagazineEC 15 NOV

RT @FishNChipAwards: We love a friday... not just because it's the end of the week but also because it gives us an excuse to get fish and c…

Follow Essentially Catering Magazine on Facebook

Article Archive

Christmas presence

With the festive season nearly upon us, now is the time to check that all is planned and ready both to embrace and benefit from this particularly busy time of year. Read more >

Soft Drinks

Britvic’s 2017 research into the importance of soft drinks at Christmas revealed that almost half of consumers (45%) were set to buy more soft drinks at Christmas and over a fifth (21%) planned to drink less alcohol. Read more >

View previous articles > 187
Advertisement Cooking oil offer