Chesterfield hotelier says minimum wage hike will heap more pressure on hospitality sector

In his autumn statement on Wednesday, November 22, Chancellor Jeremy Hunt announced that the minimum wage is to increase by £1.02, setting the new rate at £11.44 per hour for workers over the age of 23. Hourly rates for ages 18-22 and apprentices will also see comparable hikes.

While that will no doubt be welcomed by around 2.7million low paid workers struggling with the cost of living, responsibility for delivering the increase will fall on employers’ balance sheets – a challenge which may be harder in some sectors than others.

Steve Perez, owner of Chesterfield’s Casa and Peak Edge hotels, said: “The problem we have is that all our costs have gone up, and the minimum wage will have gone up by around £2 per hour since 2022. How can hospitality afford this without big price rises or job losses?

“We will obviously pay but it’s going to be reflected in the cost of goods, which means people will go out less and spend less as it becomes more expensive.”

He added: “Of all those on the minimum wage, a third are in retail, a third are in care work and the other third are in hospitality. While the government says it can only afford a five per cent pay rise for NHS, it’s asking the private sector to meet a ten per cent rise.”

Although keen to stress that the lowest rates of pay in his own businesses are set above the minimum wage, Steve says he will have no choice but to raise the floor of that pay scale and bump up every higher grade too in order to attract talent and incentivise career progression.

He does not expect that to mean imminent redundancies, but it could mean fewer opportunities to take on new recruits and the existing workforce being asked to take the strain.

Steve said: “Hospitality is traditionally low-paid because people don’t realise the skills it takes or the difficulty of the job. I would love to pay our people a lot more, but unfortunately we can’t get a higher price for our beer or food.

“With utility bills and the cost of other goods still very high we have definitely already had to put our prices up, and customers coming in for a pint have said so, but that’s what we have to charge to have any chance of staying in business. Casa Hotel this year made absolutely zero profit.”

He added: “While we appreciate the Chancellor not increasing excise duty on beer this time, something could be done about VAT. If you go to a supermarket and get a ready-meal, it’s maybe poor quality food, small portions, lots of packaging and there’s no VAT.

“Come for a meal in our restaurant where we’re employing lots of young people, sourcing produce from local farmers, cooking from fresh and all the rest of it, we have to charge 20 per cent VAT. It’s totally unfair.”

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