Truss was elected as the next leader of the Conservative Party earlier today (5 September) and will become Prime Minister tomorrow. It comes after Boris Johnson was forced to step down as leader earlier in the summer following a series of Cabinet resignations.
“Congratulations to Liz Truss on her election as the new leader of the Conservative Party and our Prime Minister,” says Kate Nicholls, CEO of UKHospitality.
“We very much look forward to working closely with her and the new Cabinet in the coming weeks, as we strive to save the hospitality industry, which is experiencing crushing cost rises.”
The energy crisis is having a profound impact on the viability of many businesses in the hospitality sector with some operators already announcing the closure of sites due to the impact of rising bills.
Nicholls warns the new Government must act quickly and decisively to address the soaring energy bills that are facing consumers and businesses.
“With the right package of support – including a reduction in the headline rate of VAT for the sector to 12.5%, a business rates holiday, the deferral of all environmental levies, the reinstatement of a HMRC Time to Pay scheme and the reintroduction of a trade credit insurance scheme for energy – the sector will be well placed to aid growth through generating jobs and local investment.
“Pre-pandemic, our industry spent £10bn a year in high-street regeneration and employed 3.2m people but with energy bills for hospitality businesses rising 300% on average – and as high as 750% in some cases – we desperately need a package of support put in place if we are to be able to play our part in the UK’s economic recovery and growth.”
Michael Kill, CEO of the Night Time Industries Association (NTIA), which represents some 1,400 independent bars, clubs and live music venues across the UK, echoes Nicholls' words, saying that it's vital the new Prime Minister takes the opportunity to be decisive in tackling the cost inflation crisis.
“Over the coming weeks without an effective intervention from the Government, we will see thousands of businesses go to the wall and millions of jobs lost,” he says.
Truss used her acceptance speech to pledge to 'deliver on the energy crisis' by dealing with bills as well as supply issues. Although so far the focus appears to be on support for domestic households, with little to no information on the Government's plans to deliver help to businesses.
Martin Williams, CEO of Rare Restaurants, warns that spiralling energy costs are likely to mean closing time for many independent restaurateurs, leaving 500,000 jobs at risk.
“Food and wage inflation, plus ridiculous rates have already wiped practically all profitability out of our sector – now energy costs will simply mean closure for many SME’s – unless the Government steps in.”
Williams continues that energy prices across the Rare Restaurant's estate, which encompasses both the Gaucho and M Restaurants brands, have been fixed. Had they not, the impact of rising costs would have resulted in a £3.5m hit to the group's profitability.
“To maintain margins this would mean steaks would have to triple in prices to beyond £100,” he says.
“Our brands' current popularity means that we are opening a new M Restaurant in Canary Wharf this week and plan to open Gaucho in Newcastle and Liverpool later in the year. However, unless energy prices are addressed, restaurants across the sector will be unable to viably open and many SME’s will sadly collapse.
“It is time to reverse the VAT increase made in April and have a comprehensive review and reduction in business rates so that Hospitality has parity with the retail sector.”