With the Autumn Budget approaching on 28 October 2026, hospitality businesses will be watching closely to see whether the government offers relief from increasing cost pressures or, at the very least, avoids placing further burdens on the industry.
The hospitality industry heads into this week’s Budget with some signs of improving confidence, but significant pressures remain. Recent industry data suggests that optimism has improved for some, but confidence levels remain divided as rising energy bills, inflation and interest rates continue to create uncertainty for businesses and consumers. The Business Confidence Survey from NIQ and Zonal found that 53% of sector leaders were optimistic about their own business prospects over the next 12 months, up from 37% at the end of the previous quarter. However, only 11% of independent leaders surveyed shared that optimism.
What has already been announced for the hospitality industry?
In July 2026, the government announced a further 20% cut to business rates bills for pubs, social clubs and live music venues in England from April 2027. This follows the 15% relief introduced earlier in 2026. The government estimates that the additional support will benefit nearly 32,000 venues and save the typical pub an estimated £1,100 in the next financial year.
However, cafes, restaurants and hotels will not benefit from this additional relief. The government has also confirmed that the largest live music venues will not qualify for the additional relief, with further details of that exclusion due to be provided during the Budget announcement.
VAT: will the government respond to industry calls?
A reduction in VAT remains high on the hospitality industry’s wish list. The campaign #VATsTheProblem, spearheaded by chef Tom Kerridge, calls for a 10% hospitality VAT, alongside other measures aimed at reducing the tax and employment costs facing hospitality businesses.
However, a cut of this scale would have significant fiscal implications. Whether the government is prepared to respond to the industry’s calls for a reduced rate will be one of the key announcements for hospitality businesses to watch out for.
The challenges for hospitality payroll
One of the biggest challenges for the hospitality industry is the cost of labour, particularly following increases in employers’ National Insurance and minimum wage. Chancellor John Healey is expected to announce plans to increase the minimum wage by nearly 4% from £12.71 to around £13.20 for those aged 21 and over. The minimum wage for 18 to 20 year olds is also expected to increase from £10.85 to around £11.27 per hour.
The government is seeking to improve pay for lower-paid workers, but higher wage and employment costs may lead some businesses to hire fewer people. This is particularly significant for hospitality, which is a major source of entry-level jobs for younger workers. Labour pledged in its manifesto to scrap the youth rates by raising them faster than the adult rate. However, employers have said that recent increases relative to the headline rate have made it unattractive to offer young people jobs. The government is also keen to help more young people who are not in education, employment or training into work (commonly known as NEETs), so it will need to consider how increases in labour costs could affect the number of opportunities available to them.
What time is the budget announcement?
The Budget speech is expected to start at 12:30pm on Wednesday 28 October 2026 after Prime Minister’s Questions.
As the festive season approaches and hospitality enters its busiest time of year, the industry will be watching closely and hoping for a Budget that helps businesses grow.
