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‘Stop whinging' about the National Living Wage

09 July 2015 by
‘Stop whinging' about the National Living Wage

Oakman Inns and Restaurants chief executive Peter Borg-Neal has urged those in the hospitality industry who have come out against the National Living Wage announced in Chancellor George Osborne's Budget yesterday to "stop whinging".

To be launched from April 2016, the compulsory National Living Wage will require employers to pay working people over the age of 25 at least £7.20 an hour, rising to £9 an hour by 2020. The minimum wage currently stands at £6.50 an hour.

The British Hospitality Association (BHA) immediately expressed its shock at the announcement of the move, on which it had not been consulted, warning that the planned changes could involve job losses.

Though the Chancellor said it would only have a "fractional impact" on jobs, BHA chief executive Ufi Ibrahim called for a "constructive dialogue" on the issue, and suggested that hospitality could see a number of job losses as a result of the number of relatively low-paid workers in the sector.

"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," she said.

Meanwhile, independent hotelier Tim Hart, who has run the four-red-AA-star, 17-bedroom Hambleton Hall near Oakham, Rutland, for 35 years added: "In order to deal with hardship affecting those losing benefits, the chancellor appears to have condemned caterers to giving very large pay rises to millions who are nowhere near claiming benefits," he said. "The losers will be low-paid employees who lose their jobs."

In other quarters, there was a reluctance to comment at all, for fear that voicing opinions against the measure and fears about what it could do to profit margins could appear unsympathetic to employees working on the minimum wage or just above it.

However Borg-Neal, whose business Oakman Inns and Restaurants just opened its 13th site, the King's Head in Chipping Ongar, after a £1m refurbishment, advised the hospitality industry to stop complaining about the changes.

In an extensive response to The Caterer when asked for his views on the matter, he said: "My first reaction is to say that I will be very disappointed if the main focus for our sector is the introduction of the compulsory Living Wage. When he was President of the Board of Trade in 1909, Winston Churchill introduced Britain's first legislation mandating minimum salaries, making it clear that they should be enough to live on. He said at the time: ‘It is a serious national evil that any class of His Majesty's subjects should receive less than a living wage in return for their utmost exertions'."

"I can't believe that people are still whinging about this. Certainly, it will be an own goal, in image terms, if the leisure sector moans about the initiative. We need to talk more about the positive points about working in our sector. From an Oakman Inns perspective we have already taken the decision to ensure that everyone who has been through the first few stages of our ‘Oakmanology' training with us will be earning £7.85 per hour or more.

"The other positive highlights are the reduction in corporation tax rates and the increased investment allowances. I am also relieved that the changes in Entrepreneur Relief will not effect business founders - who after all are the people who take the upfront risk.

"So what disappoints me? Well, I think any sensible analysis of the way business is taxed in the UK would indicate that SMEs are still bearing a disproportionate tax burden compared to multinational companies who are able to move profits offshore. I would like to see George Osborne, who increasingly impresses as Chancellor, deliver some radical changes in this area over the course of this Parliament. Most real growth in the economy is generated by SMEs and we deserve the oxygen of a lighter tax regime. In particular it was very disappointing to hear nothing about business rates.

- "One thing that I am a little worried about is the changes to taxation on acquired goodwill. At first glance this appears to have the potential to negatively impact on M&A activity.

"But all in all we, as a sector, should be a little bit relieved and a little bit pleased with this Budget."

Nick Thomas, finance director, Harbour& Jones added: "We see the introduction of the national living wage as a very positive development. Anything that encourages people to take up a career in the hospitality industry can only be a good thing. The living wage, along with the increase in the basic tax threshold will make a real difference to people starting out in our industry and should help in recruitment and retention. And all of this should be good news for our clients and customers too."

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BHA calls for "constructive dialogue" with Treasury over National Living Wage >>

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