On Oct. 30, all eyes in the United Kingdom will be on the Labour Party, which will deliver its first budget since it was elected in July.
The last time a U.K. Labour government unveiled a budget was in April 2010. The Chancellor of the Exchequer then was Alistair Darling.
I am not saying that the 2010 budget was disastrous, but the Labour Party lost power a month later to the Conservative Party, which then ruled up until July 4, 2024.
The Labour Party is the party of taxes, if one believes its detractors, but the “new” Labour Party is at pains to underline that it will not remain the tax party.
In its election campaign, the Labour Party said it would not increase income taxes, corporation taxes or sales/value-added taxes, and it would be a very foolish government to do a U-turn on this at what is considered the first indication of the country’s direction.
Prime Minister Keir Starmer and his cabinet also said national insurance contributions will not be increased, but it has been coy in its wording.
It's possible that employee national insurance contributions will not increase, but Labour officials have been less forthright over whether employer national insurance contributions will increase.
National insurance contributions from both employee and employer are deducted from employees' salary payments. The more the employee adds to their pension pot via this system, usually, the more the employer will match that percentage, up to a certain percentage.
As a political party that unapologetically stands up for the National Health Service and employee rights, and which has promised more house building, among other policies, the Labour Party needs to find cash from somewhere within the taxpayer base.
Maybe capital gains taxes will increase, but it is more likely — the pauses behind the statements, rhetoric and hints point to this happening — employer national insurance contributions will, and that places more strain on the hotel and hospitality industries than it will on most other sectors. Our industry is people-heavy, so such a decision will weigh more heavily on hotel firms.
UKHospitality, the U.K.’s foremost industry membership organization, has made its views clear on the subject. So have organizations such as the British Beer & Pub Association and British Retail Consortium.
Increasing employer national insurance contributions, they said will increase pressure on hotel profit-and-loss statements and thus on employee numbers and guest satisfaction. Extra costs for any type of business, more often that not, trickle down to employee pay packets and/or guest hotel bills.
The hospitality industry continues to shout for an overhaul of business rates — essentially, income tax for businesses — in the budget.
UKHospitality has written to the new government stating that it “[proposes] that your government introduces a new lower, permanent and universal multiplier for the hospitality sector, to be adopted across all nations of the U.K. All hospitality businesses should benefit from that multiplier, removing the cap that has acted as a disincentive to growth as employers decide that opening a second premises is simply not worth the cost.”
The April 2010 budget came not too long after the world recovered from the Great Recession. We have had the COVID-19 crisis since then, and Darling died in November of last year.
The debt-to-gross domestic product equation continues to get worse, a situation that Labour has blamed on the Conservatives, which they in turn blame on pandemic spending.
Labour has said the Conservatives left a £22 billion ($28.5 billion) "black hole" in its finances, which of course the Conservatives said is tosh, British slang for nonsense.
Upon the release of the U.K. budget, Hotel News Now will be there to sort through its implications. Stay tuned.
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