The minimum hourly rate is expected to see another large increase for adult workers next year; hospitality operators have warned that more businesses could close if the chancellor goes ahead with a rumoured rise in the national living wage in the November Budget.

It's been reported that Rachel Reeves plans to increase the minimum adult hourly rate from £12.21 to at least £12.70 an hour in a bid to boost living standards.

The move came after the Low Pay Commission, which advises the government, suggested the wage would need to rise by 4% next April to ensure it does not fall below the government’s target of two-thirds of median earnings.

Minimum pay has risen sharply in recent years and jumped 6.7% in April, leaving many hospitality businesses struggling to balance costs alongside the increase in employer’s National Insurance Contributions (NIC).

JD Wetherspoon boss Tim Martin told The Times the government had a “blissful unawareness of the long-term economic consequences” of its wage and tax rises.

Martin previously said that increases to employers’ NICs and minimum pay had cost the pub giant an extra £60m per year. 

Alex Reilly, executive chairman of the Loungers bar and restaurant chain, said:

“While no one is against the principle of the national living wage rising, we’ve seen an increase of almost 30% over the last three years, and that’s before the proposed increase.

“Without any kind of pro-business measures, an enforced increase to the cost base of the hospitality sector is unsustainable and will result in more business closures and more jobs lost, further decimating our already-beleaguered high streets and town centres.”

UKHospitality has warned that the industry is on track to have lost 111,000 jobs in just over a year by the end of November due to the impact of tax rises announced in the 2024 Autumn Statement.

In the past week Pizza Hut announced plans to close 68 restaurants and 11 delivery outlets after entering administration.

The operator of the Revolution Bars and Peach Pubs brands has also put itself up for sale, saying government changes to taxes and pay had cost it more than £4m per year.

Reeves will set out her updated tax and spending plans in the Autumn Statement on 26 November.