Sector Dismay as Chancellor Overlooks Hospitality in Spending Review
Hospitality and licensed on-trade leaders have reacted with dismay to Chancellor Rachel Reeves’ first spending review, accusing the new government of overlooking a sector still grappling with the long-term impacts of the pandemic, inflation, and rising operational costs.
Industry bodies say the review has failed to deliver the targeted support urgently needed to safeguard jobs, stimulate growth, and ease mounting financial pressures.
Many warned that the absence of meaningful measures and increased tax burdens for hospitality sends a worrying signal about the government’s commitment to one of the UK’s largest private sector employers.
Kate Nicholls, Chief Executive of UKHospitality, said:
“Thriving high streets and hospitality are absolutely essential to the Government’s mission of renewing Britain and there were some announcements in today’s spending review that can contribute to that ambition.
“Significant investment into skills, development and apprenticeships should be accessible to hospitality businesses and we’re encouraged by the potential for improvements to regional transport to benefit venues, consumers and workers alike.
“However, it remains the case that the overwhelming challenge holding back hospitality from meeting its potential is the current tax burden imposed upon it.
“As we look towards the Budget and the rest of the Parliament, it must be a priority to bring down the cost of doing business. The business rates reform being finalised this Autumn will be a critical element of that, and there needs to be the maximum level of discount applied to hospitality businesses.
“With the Industrial Strategy set to be published imminently, hospitality’s ability to deliver socially productive growth must be recognised and harnessed to deliver economic growth, jobs and regeneration in towns and cities right across the UK.”
Stephen Montgomery, director of the Scottish Hospitality Group, said:
“This statement does absolutely nothing to support the hospitality sector in Scotland or across the UK.”
“Today we heard all about the spending plans, however nothing about helping those who will pay for it through taxes. On a day where we know that unemployment has risen, employers are holding off on recruitment, inflation has all but doubled and the OBR having already halved the growth figure for 2025, the chancellor offered nothing for the third largest employer in the country, which contributes billions every year in taxes to support the public sector.”
Michael Kill, CEO of the Night Time Industries Association (NTIA), said:
“We appreciate that the government is trying to balance many competing demands. But for our sector—already absorbing tax hikes from April, the prospect of further increases is alarming. Additional financial pressure could tip many businesses over the edge, particularly given high operating costs and limited access to investment.”
The NTIA welcomed the government’s long-term focus on energy infrastructure, but warned that many challenges facing the sector are urgent and require immediate action. “Energy security for the future is important,” Kill added, “but venues are struggling to keep the lights on today.”
“Connectivity and accessibility were also highlighted as critical. While infrastructure investment is welcome, the NTIA stressed that transport and urban planning must reflect the full operating hours of the night-time economy, including the needs of the night-time workforce. Without reliable evening and late-night transport services, the sector’s growth and safety are compromised.”
“The Spending Review offered little clarity on skills development within the sector, an area the NTIA considers crucial. Training and upskilling must be embedded in a broader national strategy, not treated as isolated policy levers, particularly in hospitality and night-time industries where labour shortages and talent retention remain key concerns.”
“Another longstanding barrier to growth is access to finance. Many operators, particularly SMEs, continue to struggle with limited borrowing options and restrictive lending conditions, which has stifled both recovery and future investment. The NTIA is calling on the government to provide clearer routes to finance that are tailored to the unique business models of night-time operators.”
“Despite modest signs of sectoral resilience in Q1 2025, the NTIA warns that the cumulative effects of fiscal tightening could spark another wave of closures. With the night-time economy contributing over £153 billion to the UK economy annually and employing more than 2.11 million people, its continued decline would deal a significant blow to national recovery, local economies, and cultural vibrancy.”
“We need a budget that understands our value,not one that inadvertently accelerates decline,” Kill concluded. “The government must work in partnership with us. The capital investment plans may look bold, but the devil is in the detail. We need immediate support, clear fiscal strategy, and genuine engagement ahead of the Autumn Budget if we are to safeguard a safe, thriving, and sustainable night-time economy.”
Tina McKenzie, Policy Chair of the Federation of Small Businesses (FSB), said:
“Small businesses will be wondering when they will feel the benefits of today’s Spending Review. It was not the business-focused day they had hoped for.”
“As spending allocations were announced, decisions over how that money would support small businesses were not included. Increased Statutory Sick Pay came without help for small businesses to afford it; extra money for housing and defence came without a commitment to include small firms in the supply chain; new energy efficiency funding for households came without equivalent help for small business premises.”
“The one major bright spot for small firms today was the significant increase in resources to the British Business Bank, which FSB campaigned for in advance of today’s statement and which we welcome. This should see far more finance flowing to local businesses up and down the country.
“With headline departmental funding allocated, the challenge now passes to each and every government department to be strategic with their spending over the next three years – using every taxpayer pound to get the most value, stimulate the economy, and spread jobs and growth. SMEs should get a far greater share of public contracts, and big businesses which treat their smaller suppliers poorly should be banned from winning them.”
“Small business confidence is already languishing at levels comparable to the energy bills crisis, while job numbers in small businesses are falling fast, so bold, concerted action is needed. You can’t grow the economy and tax revenues without growing small businesses.”
“Small firms were not the focus today, but the second half of 2025 now becomes a crunch period for SME-focused growth reforms. Ministers must buckle down on this over the summer and through to the autumn, putting small businesses at the heart of the Industrial, Trade and Small Business Strategies. This includes addressing business rates, Employment Allowance expansion and Statutory Sick Pay in the autumn Budget, and proper legislative reform in the King’s Speech.”
“The benefits will only come if the Government takes these challenges seriously through to the autumn.”
Taking to social media the British Beer & Pub Association said:
Once again sets the stage for Labour’s plan for growth—but with rising costs and squeezed margins, we urge Ministers and Mayors to act and back our sector in national policymaking and Local Growth Plans.”
“Our sector has a foundational role in unleashing growth in every constituency as an economic force multiplier. Last year alone, the industry contributed £34.3 Billion to the economy (GVA) and generated £18 billion in tax.”
“Despite this, nearly 300 pubs closed across England and Wales in 2024; equating to more than 4500 job losses alone.”
“As we look ahead to the Autumn Budget, we urge the government to implement meaningful business rates reform and a reduction in beer duty to back British pubs, British beer and encourage growth across the country.”
“With the right support, we’re ready to deliver more jobs, more investment & more widespread community value.”