Now that we have a new Chancellor and Government, there is a crucial opportunity with the incoming Budget to re-create the increasingly dire situation in the hospitality industry.
Many of us voted for change to bring in this new administration. However, expectations of higher national insurance contributions for employers only and talk of changing tax thresholds and living wage increases are raising alarm bells in the hospitality sector, which is in urgent need of recalibration.
There is an ongoing climate of uncertainty, with all kinds of hospitality businesses closing every week – closing for good because they can no longer grow their businesses. Turnover remains broadly relatively the same for many operators I know, both here in Liverpool and in the UK, but the reality is that it is becoming more difficult every day to make this turnover profitable.
We urgently need a recalibration of the hospitality tax, which will generate £54 billion in tax revenue by 2022. In Liverpool, the tourism sector – of which hospitality was a large part – was worth £6.25 billion in 2023. For a city with hospitality in its DNA, we must increase this every year; The question remains how can we make this happen here, and across Britain?
Because we continue to face incredibly demanding, exhausting and difficult circumstances. So unless the government really listens, we will see more closures and more layoffs. How many other fresh food run businesses need to close for the new government to realize they are not allowing the hospitality industry to grow, invest, create jobs and quite frankly survive?
Unless action is taken soon, the sector is on the verge of failure, with post-Covid support long gone but debt still largely in place, along with the continued lack of consumer confidence. And it’s not just restaurants: pubs, cafes, bars and more are all facing the toughest trading landscape imaginable, with the perfect conditions for failure.
We would like to grow again and there are many obstacles that stand in the way of this growth. Some of the main pressure points are:
- High VAT on freshly prepared food
- Business rates relief is coming to an end – the threat of a rate increase on April 1, 2025
- Energy costs
- Ingredient cost inflation
- The wage rises
- Increased business PAYE and NI contributions
- Brexit tariffs on imports of wine and international goods
- Borrowing costs
- Repaying CBIL loans that companies had to take out to survive during the pandemic
The most important point is to realign VAT on freshly prepared food so that it is in line with Europe for freshly run businesses, so that we can grow, invest and prosper using artisanal skills and our people and business in a can develop in a normal way, and not just have to scrape by week by week. week. There is a chorus of companies in the UK asking for this.
And we need business rates reforms to create a level playing field for businesses with physical branches on the high street, compared to online businesses and dark kitchens. It makes no sense how business rates are currently assessed and what fees are levied, on top of the possible end to business rates relief next spring, which would be another crippling blow.
We voted for change. Now we desperately need it in the catering industry. I really hope that the Chancellor and the Government are listening.