Industry faces challenges amid Budget impact

As April begins, the impact of the UK Budget is starting to be felt across the hospitality sector. However, Colin Neill, CEO of Hospitality Ulster, has warned that the sector faces several additional challenges that shouldn’t be overlooked.

These include the ongoing unfair VAT rate on the Island of Ireland, high business rates, and the recently published Review of Licensing Legislation, which has serious implications for 5(1)(a) and 5(1)(b) licence holders. Neill also highlighted the increased costs resulting from the implementation of Extended Producer Responsibilities (EPR) on supply chains.

“With April now upon us and the impact of the UK Budget now beginning to bite, it would be easy to miss the other challenges that we face as an industry,” Neill said. “The ongoing issues of an unfair VAT rate, extortionate business rates, the Review of Licensing Legislation, and EPR are adding further costs to our supply chain and increasing the price of goods.”

In a more positive update, Neill shared that the potential negative impact of the Deposit Return Scheme had been mitigated after successful lobbying. The on-trade sector (restaurants, pubs, bars, etc.) will now operate under a closed-loop system, which means customers won’t be charged a deposit. However, suppliers will still be required to charge and refund the deposit on eligible packaging.

“Following a successful lobby, the potential negative implications of the Deposit Return Scheme have been reduced,” Neill noted. “The on-trade is now classified as a closed loop and will not need to charge customers a deposit.”

The sector’s labour market remains tight, and businesses are increasingly focused on attracting and retaining skilled staff. While some establishments are reducing their workforce due to financial constraints, maintaining a steady influx of new entrants is crucial for long-term recovery.

“We remain focused on attracting and retaining staff in a tight labour market. While businesses may be reducing staff due to budget constraints, maintaining a supply of new entrants is vital to meet natural churn and prepare for economic recovery,” Neill added.

In the coming weeks, Hospitality Ulster will host regional meetings to address pressing issues such as the Review of Licensing and the Surrender Principle. Neill encouraged members to reach out with any urgent concerns.

Licensing System Review and VAT Lobbying

The Independent Review of the Liquor Licensing system in Northern Ireland, including the controversial Surrender Principle, has now been published. The Department for Communities has six months to decide on the next steps. Neill’s team is currently analyzing the 26 recommendations, which will impact all licensed premises. These include recommendations related to the Surrender Principle, which could have significant consequences for 5(1)(a) and 5(1)(b) licences.

“Since the publication of the review, our Policy Team has been carefully analyzing the report, which contains twenty-six recommendations that would impact all licensed premises,” Neill commented.

Hospitality Ulster is also continuing its lobbying efforts for a VAT reduction in Northern Ireland. Following a motion passed by the NI Assembly, the organisation is working with the new Finance Minister to follow through on the motion. Furthermore, the group has been lobbying individual Labour Party MPs and will host 25 MPs in Belfast to reinforce their message. In Coleraine, they are partnering with Retail NI to host a roundtable meeting with the NI Secretary of State, advocating for a VAT cut.

“We are seeking a follow-up meeting with the Finance Minister to ensure he respects the motion passed by the Assembly,” Neill stated. “We’re bringing a united front to ensure that VAT is cut to allow our businesses to compete effectively.”

Minimum Wage Update

The recent changes to the National Minimum Wage (NMW) and National Living Wage (NLW) rates are another consideration for businesses. From April 2025, the new rates are as follows:

• National Living Wage (21+): £12.21 (up by £0.77, 6.7%)
• 18-20 Year Old Rate: £10.00 (up by £1.40, 16.3%)
• 16-17 Year Old Rate: £7.55 (up by £1.15, 18.0%)
• Apprentice Rate: £7.55 (up by £1.15, 18.0%)

The accommodation offset has also increased to £10.66 per hour, reflecting a 6.7% rise.

Despite the challenges facing the industry, Colin Neill and Hospitality Ulster are committed to supporting members through continued advocacy and practical solutions. Regional meetings will continue in the coming weeks to discuss critical issues such as the Review of Licensing and VAT concerns, and businesses are encouraged to reach out for assistance.