Hilton's UK managing director, Stephen Cassidy, has called on the government to implement tax reductions for the hospitality sector to help combat a youth unemployment crisis estimated to cost the economy £14.4 billion annually. A report commissioned by Hilton found that a lack of experience is the primary obstacle for one in four unemployed young people seeking employment.
This "experience gap" results in significant economic losses, including reduced tax revenues and increased welfare spending. Conversely, providing a first job to a young person can generate over £152,000 in economic value. Currently, 16.2% of 16 to 24-year-olds are classified as not in education, employment, or training (NEET), with approximately 400,000 actively seeking work, according to Office for National Statistics figures.
The hospitality sector, with its capacity to offer entry-level positions, is ideally positioned to address this issue. However, Cassidy stated that recent tax increases have hampered companies' ability to hire. "If we want businesses to invest in the next generation, we need policies that encourage employers to create more jobs and give young people the chance to prove what they can do," Cassidy said.
Cassidy's proposals include reducing employer National Insurance Contributions for the hospitality industry, a fundamental reform of business rates, and a cut in VAT for the sector to 10%, aligning it with European rates. He also expressed concern that a proposed visitor levy could further impede hiring.
Research suggests that filling existing hospitality vacancies with young people could move around 33,600 individuals into employment and generate £2.3 billion in economic benefits each year. The industry points to past tax changes, such as the increase in employer National Insurance contributions from 13.8% to 15% and the reduction in the secondary threshold to £5,000, as having a detrimental effect on job creation. Allen Simpson, chief executive of UK Hospitality, stated that this NICs change was a significant factor in job losses within the sector.
UK Hospitality advocates for the upcoming Budget on October 28 to be a "moment for change," urging ministers to reverse policies that disincentivize employment. They argue that rebalancing the tax system to lower hospitality costs would provide businesses with crucial financial flexibility, stimulate job growth, and support high streets. Similar sentiments were echoed by Asda boss Allan Leighton, who called for an update that would encourage economic growth.