Hilton's CEO has urged the government to implement tax reductions to enable the hospitality sector to address a substantial youth unemployment crisis, estimated to cost the economy £14.4 billion annually.
According to a report by WPI Economics commissioned by Hilton, one in four unemployed young people identify a lack of experience as their primary obstacle to employment. This 'experience gap' results in significant economic losses through uncollected tax revenues and increased welfare spending. The research indicates that providing a first job to an unemployed young person generates over £152,000 in economic value.
The current situation sees a record 16.2 percent of individuals aged 16 to 24 classified as 'not in education, employment, or training' (NEETs). Of this group, approximately 400,000 are actively seeking work, according to figures from the Office for National Statistics.
Stephen Cassidy, CEO of Hilton, stated that the hospitality sector is well-positioned to offer young people their initial work experience. However, he noted that rising taxes over the past couple of years have made it difficult for companies to hire. Cassidy emphasized the need for policies that encourage employers to create jobs and allow young individuals to demonstrate their capabilities.
The report's findings align with industry-wide calls for government action to ease the tax burden on hospitality businesses. Cassidy specifically suggested that the government consider lower employer National Insurance Contributions for the sector, a fundamental reform of business rates, and a reduction in the VAT rate for hospitality to 10 percent, bringing it in line with European levels. He also expressed concern that a proposed visitor levy could further hinder employment.
Researchers estimate that filling existing hospitality vacancies with young job seekers could move around 33,600 individuals into employment, generating an estimated £2.3 billion in economic benefits per year.
The report references previous tax changes, including former chancellor Rachel Reeves' increase in employer National Insurance Contribution rates from 13.8 percent to 15 percent and a reduction in the secondary threshold to £5,000. This change reportedly drew criticism from hospitality firms as it subjected many part-time and lower-paid workers to the tax for the first time.
Allen Simpson, chief executive of UK Hospitality, described the National Insurance Contribution change as a significant factor contributing to job losses in the hospitality sector over the preceding two years. He argued that a combination of reduced National Insurance Contributions and VAT, alongside reformed business rates, could help restore nearly 100,000 jobs. Conversely, without these policy adjustments and the removal of a visitor levy in England, the industry might face further job reductions.
UK Hospitality views the upcoming Budget on October 28 as a critical opportunity for change, urging ministers to reverse policies that have discouraged employment. The organization advocates for a rebalancing of the tax system to lower hospitality costs, thereby providing businesses with essential financial flexibility, stimulating job creation, and supporting high streets. These sentiments echo those of Asda boss Allan Leighton, who suggested that recent government updates should serve as a catalyst for growth.