Yesterday Chancellor George Osborne announced his summer budget, including plans to introduce a new minimum 'living wage' from next year for over-25s.
While reactions from the industries were mostly mixed, the British Hospitality Association said they were 'very surprised' and 'rather cross' about the announcement.
Ufi Ibrahim, chief executive of The British Hospitality Association, said: 'Hospitality and tourism created one in five jobs in the last Parliament and is the fourth biggest industry in employment terms but there is more we can achieve with further support from the Chancellor. As an industry employing a large number of individuals earning more than national minimum wage and less than the proposed living wage, we have tried to have a constructive dialogue with HM Treasury on building towards the living wage without job losses.
'Despite the Chancellor trying to alleviate the pain with adjustments to corporation tax and employment allowances, these changes do not go far enough to reduce the impact on SMEs and mitigate potential job losses across the industry.'
Ibrahim further raised the issue of VAT, pointing out that in most other European countries, tourism VAT is on average 10%, as opposed to the UK's 20%.
'We call upon the Government to lower VAT on accommodation and attractions to 5% to increase our market’s competitiveness and reduce costs to working families,' she said. 'A cut to tourism VAT could supercharge the economy with over £20 billion in foreign exchange earnings and domestic spending over the next 10 years.
'While we are analysing the potential impact of the Chancellor’s announcement, constructive dialogue with HM Treasury is now imperative to identify measures to counterbalance the Government’s ambitious agenda with the realities of running a high service and very low margin business.'