There has been a great deal of concern from hoteliers and those representing them in the aftermath of the Oct. 30 United Kingdom budget, the first to have been delivered by the recently elected Labour Party.
Here at Hotel News Now we write about the hotel industry and hoteliers. We write about what drives or could drive their businesses, the challenges they face, their successes and innovations and the developments and brands that attract guests to book rooms.
I once heard someone at a conference say that hoteliers always will believe they have challenges, things to moan about, but the industry is a generally blessed one, with demand that does not seem to ever disappear unless there is a pandemic causing the world to come to a halt.
The hotel industry does well, and it is a fantastic employer of lots of people, even if many of them are in the bottom half of salary considerations. This also is an industry that allows dedicated, clever, resourceful people to start at the bottom and rise to the top.
On the other side of the equation, there is a cost-of-living crisis in the U.K., and I am sure it is not the only country to be in part suffering. That a crisis exists, I believe, is undeniable. COVID-19 threw everyone into a downtown spiral.
The hotel industry will benefit from all society being better off and having more discernible income.
There is no use for a society where those who have are farther and farther away from those who do not have.
Not everyone in society is able to climb back out of problematic times at the same speed. Where one is born, where one is educated, where one has connections, all these help some people be more flexible than others in a society — this is Britain I am talking about — that is class-based through to its core, even if it is also a country where people can fulfill their dreams.
There has been some moaning about tax and wage increases in the budget, but if it is true there is a £22 billion ($28.5 billion) hole in the finances — as the ruling Labour Party claims and shaped its budget around — then there must be redress and correction. There is no magic money tree, as politicians like to claim their opponents believe exists.
Increased wages and higher employer national insurance contributions place more pressure on hotels’ P&Ls, of course, but employees interviewed by many newspapers and media outlets have said they believe the budget works for them.
I have tried to read as much commentary from employees as I can, from both sides of the journalism political divide. The consensus is budgets never please everyone.
We wanted to address how this new U.K. budget affects hoteliers and their operational and taxation costs, and hopefully that coverage is conveyed through facts, not opinions.
Yes, it contained some pain, but the new era of Labour Party despite knowing in the modern world it has to promote and help growth and business, still has working people in their minds when they formulate policy.
That is its historical legacy. For it to change that would make the party unnecessary, although it should be added the 2024 budget was not the budget with the highest eye-watering numbers.
In its election campaign, the Labour Party said it would not increase income taxes, corporation taxes or sales/value-added taxes, and it would have been a very foolish government to do a U-turn on this at what is considered its first indication of the country’s direction.
The question was, how to plug that £22 billion gap if that exists? The independent, government-funded Office of Budget Responsibility seems to think it does.
Better-paid employees might not spend any more money in the hospitality business, and if less money comes to them and others in a taxes-heavy budget, then hotels might see few bookings. The downward spiral everyone hopes can be broken might not be broken as High Street businesses struggle from what they see as an unfair business-rate structure and a higher National Living Wage.
Economists are political in nature, regardless of whether they claim they are not. An economist might come up with a hundred permutations as to why this budget might be disastrous. But to not help living standards rise is folly for the first government — of any color — following a pandemic and an economic landscape of what until very recently was very high inflation and interest rates.
Well, that’s my opinion.
I assume wage increases will not be as much as they could be in 2025 as employers begin their own budgets, but the changes in national insurance contributions and other wage-slip taxes and the increase in the lowest level of pay surely will help.
On a non-hotel note, the latest U.K. budget also distributed capital to compensate British victims of the tainted-blood scandal and the Post Office-Horizon scandal. This is so long overdue as these are very embarrassing national scandals.
The previous government had said these two groups would be compensated, but they had not put into place any budgeting for them.
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