90% of venues struggling with extreme costs
A new survey of over 500 members from the Night-Time Industries Association (NTIA) revealed more than 90% of businesses throughout the sector are experiencing extreme financial impacts as a result of the new Budget. Some 40% of businesses also warned unless support is received, they could be forced to close within the next six months.
The night-time economy is a £136bn industry and supports over 2m jobs within the UK. It also serves as one of the biggest employers of under-30s. However, escalating costs and significantly decreased consumer spending, is compromising the sector’s chances of remaining afloat.
Increased pressures
Prior to the autumn Budget, businesses throughout the night-time economy were already dealing with a 30 to 40% increase in operating costs as a result of the ongoing cost-of-operating crisis.
Consumer spending has also drastically fallen as disposable income decreases, contributing to notably reduced consumer interaction, shorter dwell times, and ultimately lower spending per visit.
The NTIA’s latest survey outlines issues faced throughout the industry:
- Extreme operating costs: 75% of venues expect additional annual costs, which exceed £30,000 due to factors such as increases in energy prices, national insurance contributions, alcohol duties, and minimum wage. Some businesses also face annual hikes which surpass £80,000.
- Job losses: The NTIA survey also indicates that some 92% of businesses are forced to cut jobs, resulting in thousands of workers left without income and communities without the added social and economic benefits that these venues provide.
- Forced price increases and service reductions: In order to manage rising expenses, over 90% of businesses are left raising prices, cutting staff hours, and reducing operational hours, as well as delaying essential investments.
- Unsustainable workforce costs: businesses are struggling to provide quality service and safety. The weight of increased workforce costs, creating an unviable trading environment for many operators.
- Severe profitability and viability worries are high, with some 88% of respondents stating that the autumn Budget will extensively harm profitability.
Crippling economic vitality
NTIA CEO Michael Kill said: “The autumn Budget has effectively signed a death sentence for many night-time economy businesses across the UK.” He continued, “this sector, which contributes over £136 billion to the economy and employs over 2 million people—especially young people under 30—is being pushed to the brink.” Kill explained that the Government’s ‘pro-growth’ claims, “ring hollow” in the face of policies that are ultimately, he states, “crippling the very industries that drive economic vitality, social cohesion, and cultural richness.”
The NTIA has called on the Government to take immediate action on three critical areas, in order to help aid the night time economy. These asks include:
- An expanded business rate relief: targeted rate relief to provide critical lifelines for small and medium-sized venues that don’t benefit from the financial reserves of larger corporations.
2. Energy subsidies for nightlife venues: direct subsidies implemented for night-time economy venues,
3. Reconsideration of alcohol duty and employer national insurance contributions: in order to foster vital growth within the sector.
The NTIA ultimately call for significant support throughout the sector, as they fear rising pressures may dangerously hinder growth within night time hospitality venues and therefore dismantle an industry that contributes substantially to the UK’s economic wellbeing.
