How will the new Government affect hospitality workers?

The slogan ‘it’s the economy, stupid’ famously helped Bill Clinton become US President back in 1992. Politicians here in the UK were saying pretty much the same thing during the recent General Election campaign — though there was probably more talk about the colour of politicians’ ties than the colour of their money.

With the Conservative Party and Liberal Democrats trying to forge an economic recovery together, , it’s going to get very interesting. Traditionally, the two parties have had radically different approaches to the economy, but now they‘ll have to put aside their differences and cherry-pick the best bits of both their economic policies:

National Insurance – scrapping the ‘jobs tax’

The main topic of interest for anyone in employment, hospitality or otherwise, is the Government’s plans to scrap Labour’s proposed increase of 1p in the pound for National Insurance (NI) contributions, paid for by both employers and employees (usually taken out of your pay, alongside income tax). This is good news for those looking for hospitality jobs, too: the Conservatives and leaders of some of the biggest businesses in Britain branded this proposed rise a ‘jobs tax’, arguing that the extra cost to businesses would stop them from hiring new people. This has now been scrapped.

Income tax – more money in your pocket

The other key element is the proposed change to the personal allowance for income tax. Currently, the best part of anyone’s income is the first £6,000, on which you don’t pay any income tax. The Conservatives agree with the Liberal Democrat proposal to raise this level to £10,000 over the long term (for those earning under £40,000 per year). This is good news for those in entry-level hospitality jobs, as with a proposed increase of £700 to the threshold from April 2011, this could mean an extra £140 in your pocket — which the Government hopes you’ll spend to help the economy get going again.

Other plans

Further afield, there are plans to help stimulate the economy and generate new jobs.

In addition, the Government will seek to boost the economy AND protect the environment by helping to set up a high-speed national rail network. This could potentially help the hospitality sector by creating better links to tourist areas, which means easier journeys for hospitality workers who live far from their jobs, and higher visitor numbers to those areas. Although the positive impact of this might be balanced out by manifesto plans to halt the proposed third runway for Heathrow.

But, as with any period of change, it isn’t all good news. The other parts of the new coalition Government’s economic recovery plan might prove harder to swallow for those looking for hospitality jobs.

Immigration - limiting economic migration

For those coming to work in UK hospitality from outside the EU, things are about to get tougher. To deal with immigration, the Government is planning on introducing an annual limit on the number of economic migrants coming to live and work from outside the EU, though details of how this would work have yet to be spelled out. However, this is good news in a way, as it will make competition for hospitality jobs less fierce for those already in the country.

Unemployment – getting tough on benefits

The new Government will be tightening up on jobseeker and unemployment benefits. As part of this crackdown on unemployment, those claiming jobseeker’s allowance will have to demonstrate their ‘willingness to work’ in return for benefits and will have to join organised welfare-to-work programmes sooner, rather than job hunting alone.

Those under 25 will have to join a programme after six months of continuous unemployment or earlier. There is also agreement to end the various welfare-to-work programmes and introduce one single programme, putting greater pressure on those providing these services to get people off benefits and find a job sooner.

Pensions and working time – calling it a day

Anyone looking forward to retirement may have to put their plans on hold for a while longer! There are plans to get rid of a default retirement age and raise the age at which you can receive a state pension from 65 to 66.

And for anyone waiting for the end of the day —never mind the end of their working life —there will be a move to reduce the application of the working time directive in the UK (which, for some professions, limits the working week to a maximum of 48 hours and guarantees at least four weeks of paid holiday).

The wider economy

The new Government’s biggest and most important job is to reduce the deficit (the county’s debit) by £6 billion. The Coalition has pledged to achieve the bulk of this by reducing Government spending rather than by raising taxes. There has been much argument about what this will actually mean for the economy, but the Conservatives have, for now, won the argument and will set about reducing the debt sooner rather than later. How this will impact the hospitality sector remains to be seen.

Indeed, the Conservative-Liberal Democrat coalition has had to throw out the old rule book as British politics enters unknown territory, with unprecedented cuts to public spending on the horizon. As for a sustained economic recovery, the proof, as they say, will be in the pudding — and only time will tell what it will taste like.

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