Bosses call for help at Budget
In the open letter, UKHospitality (UKH) and business leaders outline how rocketing cots, labour shortages and the cost-of-living crisis has led to an unprecedented surge in closures.
It coincided with a consumer survey that showed three quarters (74%) thought hospitality needs and deserves more support from the Government.
Vital role
The data, which was from Zonal and CGA, also found 64% of UK consumers believed the sector plays a vital role in their communities.
Signatories from across the sector including Fuller’s, Mitchells & Butlers, Revolution Bars Group and Stonegate, back UKH’s calls for the Chancellor to put a 3% cap on business rates from April, introduce a temporary cut to 10% in the lower rate of employer national insurance contributions and review the benefits of a 12.5% VAT rate to hospitality.
This followed a survey of The Morning Advertiser readers showed the majority (85%) of the 113 respondents said VAT was the most important area for the Government to take action on.
Sector message
On the letter, UKH chief executive Kate Nicholls said: “The sector’s message to the Chancellor is loud and clear – without further economic support at the upcoming Budget, we risk losing more of our institutions and doing irreversible damage to our world-leading hospitality sector.
“Extortionate operating costs are making it incredibly challenging to run a profitable business so it is vitally important this is addressed in order to ease ongoing cost pressures and protect businesses from the threat of closure.
“This sector is one of the UK’s leading employers, providing work to more than 3m people and contributing more than £93bn to the economy each year.
“It not only deserves the support we are collectively asking for but it needs it.
“I sincerely hope this letter, supported by leading individuals from across hospitality, will be enough to convince the Chancellor his actions on 6 March will be make or break for many venues up and down the country.”
UKH open letter in full:
Dear Chancellor,
Ahead of the Budget, we are writing as a coalition of hospitality, leisure and tourism businesses to urge the Government to provide the necessary support to accelerate growth and investment and avoid business failure in parts of our sector.
The start of this year has been a particularly difficult period for many parts of hospitality, with an unprecedented surge in closures, among high-profile names as well as local community venues.
Operators are facing barriers to growth and recovery in the form of labour shortages and the myriad costs of doing business while our customers face their own financial challenges due to long economic Covid and the enduring cost of living crisis. Despite this, hospitality is a resilient sector.
It is currently facing a short-term, cyclical shock, not the longer-term structural decline affecting other sectors.
It has the potential to recover rapidly and contribute towards a national revival, creating jobs and regenerating high-street and coastal communities.
To support economic growth and constrain price increases, which will inevitably fuel inflation, we request that your government commits to the following measures:
A cap on business rates increases from April 2024 at 3%. The Autumn Statement 2023 announced a significant 6.7% increase in the multiplier for ‘large properties’. This is likely to be more than double the rate of inflation when it comes into effect, putting further upwards pressure on the headline rate. We also urge the devolved Governments to pass on the relief in full.
A temporary cut in the lower rate of Employer National Insurance Contributions to 10%. The sector supports measures to create a higher-wage economy but the record increase in the National Living Wage will create major cost pressures for a labour-intensive sector like hospitality. A share of the burden between Government and industry would reduce the pressures on price increases.
Review the benefits of a reduced rate of VAT for the sector to 12.5%. The UK’s current rate of VAT is uncompetitive internationally and leads to higher prices. Reducing VAT for hospitality and tourism is a globally recognised tool to boost tourism, support employment and generate growth – while constraining prices. A lower rate will also boost our balance of payments by taking market share from Europe, boosting growth and wider tax receipts.
With the right support, we can help unlock potential economic growth and get more people into work in a matter of months, helping to deliver the additional tax revenue needed to fund public services. We collectively urge you to include measures that deliver on our mutual priorities at the Budget.
