'Widespread business failures' predicted across hospitality as calls grow for Government support

31-Aug-2022 - Last updated on 31-Aug-2022 at 09:39 GMT

UKHospitality has called on the Government to introduce a business rates holiday for the sector and reverse April's VAT rise to avoid the collapse of thousands of firms this winter.

In a letter to Chancellor Nadhim Zahawi and Business Secretary Kwasi Kwarteng, UKHospitality chief executive Kate Nicholls has demanded ‘a comprehensive package of measures to the end of March 2023’ be implemented to help businesses overcome the threat from surging energy costs.

“Hospitality businesses are facing a crisis this winter, with soaring costs combined with a sharp drop in disposable incomes for our customers,” writes Nicholls.

“Without support, the industry will see widespread business failure, leading to tens of thousands of job losses, persistent scarring to high streets and damaged social mobility.”

Nicholls's intervention comes after representatives from J.W Lees, Greene King, Admiral Taverns, St Austell Brewery, Drake and Morgan and Carlsberg Marstons, who make up the Board of the British Beer and Pub Association (BBPA), signed a letter to the Government and both Conservative leadership candidates yesterday (30 August) warning small businesses will close and jobs will be lost if immediate action isn’t taken on energy bills.

Independent takeaway businesses also called on the Government for urgent support amid the energy crisis. In a separate letter backed by the British Takeaway Campaign, more than 750 restaurant and café owners called for immediate action to ensure they’re able to keep their doors open.

Nicholls suggests the Government should introduce a business rates holiday for all hospitality premises, with no caps applied; deferral of all environmental levies; the reinstatement of a generous HMRC Time to Pay scheme; and the reintroduction of a trade credit insurance scheme for energy.

She also wants to see the April 2022 increase in the VAT rate for hospitality from 12.5% to 20% reversed.

“Support has rightly been committed to households, but more must be done to help businesses, particularly SMEs, that are at risk of failure due to no fault of their own. Hospitality businesses had their resilience severely strained during the pandemic and are not able to weather the worsening storm they now face. Immediate intervention in the commercial energy market is essential to avoid dire consequences.

“This package of five measures will ensure the survival of businesses, the continuation of employment and the flow of wages, restraining inflation and leading to investment in our communities.

“Hospitality is critical to the nation’s recovery from Covid, but it needs support to get through this current crisis, and as quickly as possible.”