H&L Sector: Post-Election 2024 Commentary

The UK general election has resulted in a landslide victory for the Labour party, making a significant shift in the political landscape, which has been under Conservative governance for the past 14 years.

Labour’s, Sir Keir Starmer is poised to bring numerous changes, which will lead to implications in the Hospitality and leisure sector.

Some of the key policies indicated in the manifesto as having the greatest impact on the Hospitality and leisure sector are those relating to staffing, both in relation to employment terms and costs of employing staff.

Potential increases to minimum wage

They have proposed to remove the age bands from the minimum wage, and to make the minimum wage a “real living wage”. We await to hear what amount of increase such “real living wage” might be, but obviously it is a must for business for any changes to be staggered so that they can plan accordingly. Any sweeping immediate changes (even those brought in through legislation), should be done so in a measured way so that businesses that employ a fair number of the lower age-band (which a number of hospitality and leisure businesses do) are not unfairly impacted at a time when they are already feeling the crunch and only just recovering from a multitude of inflationary pressures.

Workers rights, including a ban on zero hour contracts

Labour proposes a ban on ‘exploitive’ zero-hour contracts and phasing out the contracts, as well as other employment rights such as ending fire and rehire and ensuring workers have basic rights to paternal leave, sick pay and protection from unfair dismissal from the start of a job. They’ve given this quite a priority in their manifesto, fledging to introduce this legislation within 100 days but have promised to consult fully with business on how to put their plans into prices before any legislation is passed.

There was no indication of increases to employer’s national insurance from Labour, so while that cost is not expected to increase, Labour’s policies around minimum wage and bans on zero-hours contracts could lead to increased wage bills for businesses. These changes could still give the sector some benefits in the long term, as moving to a fixed work force, with greater opportunity, which may in turn lead to greater investment and spending in the sector, which may make the sector more attractive to the younger generation.

Labour’s manifesto suggests they will look to replace the business rates system. Their manifesto acknowledged that the current business rates system disincentivises investment, creates uncertainty and places an undue burden on high streets. Exactly how the business rates system (in England) will be remains to be seen – they have said that they will raise the same revenue but in a fairer way. They are hoping their new system goes some way to equalise the costs between the high street players and online giants, which his hoped will better incentivise investment, tackle empty properties and support entrepreneurship. This might end up meaning lower taxes for hospitality and leisure businesses with physical presence if some of this burden is taken from business rates and put onto online players – but it remains to be seen until more detail is provided.

With the country voting a strong labour majority, this suggests a more predictable political environment, which can encourage domestic and international investment into the sector with the pound and inflation holding firm. Such stability could favour hospitality and leisure businesses as consumer confidence grows and people start to increase their discretionary spend.