What is to become of Hospitality?

We all know it’s never been an easy way to make a living from hospitality, but it is certainly one that inspires passion, without which there would be no such thing as hospitality. The thing is no matter how much passion the industry requires or demands it will come to an end at some point if it continues to be abused the way it currently is. I say abused because that is exactly what is happening to it. It is being taken advantage of by government, every aspect of it, and it can’t go on. Not because it does not want to but because it will, very soon, become totally untenable.

I read recently that for every £1 taken 47p, that’s 47%, ends up going to the government, almost, as near as damn it, half of every penny taken is theirs not yours. Okay so Rachel from accounts has promised a 15% discount on business rates for pubs, very nice of her I’m sure, but its too little, too late and too narrow. Pubs aren’t the start and the end of hospitality, they are a vital part of it but there are so many other businesses out there, many of which are sole traders or independent small businesses that aren’t pubs but are still in hospitality. Where’s the help for them with their massive rent and rate increases. Every day a restaurant closes its doors for good. Every day in every village, town and city throughout the UK family run businesses employing local people are closing. How can any government allow this to happen? But hey it’s okay, if you’re a pub you’ll get a 15% discount on your rates, and, they’ll let you open longer, especially during events such as Eurovision – hooray that’ll make you thousands of pounds!

However, the hotels, coffee shops, restaurants, cafes, etc, are getting nothing.

Personally, I’ve been in hospitality for over 55 years, I’ve owned 3 restaurants a pub and a hotel and worked in many more, and I’ve never known it so bad. Covid was difficult more so for some than others, but most got through it and I’m convinced that when Rishi Sunak the then Chancellor, on the 24^th September 2020, reduced VAT down from 20% to 5%, the hospitality world heaved a deafening sigh of relief and it saved so many businesses, more than we’ll ever know.

Surely this is what we should be doing now, cutting VAT, we have, after all, one of the highest rates anywhere in Europe. Eire currently have a tax rate of 13.5% on restaurants, cafes and general catering services as well as hairdressing but are reducing it, permanently, from 1^st July this year to 9%, imagine the difference that is going to make.

When you have the likes of Gordon Ramsey coming out saying things like “I’ve never seen it so bad. “When I look ahead to April, when the budget measures come in, I think those of us in hospitality are lambs to the slaughter.” Or when Tom Kerridge, despite his prominent profile and multiple Michelin stars, acknowledges that his pub ventures are presently running at a deficit and are being sustained by revenue from other sources, including cookery publications, television appearances, and paid speaking roles, then you know it must be bad and if they can’t make money how in Gods name can anyone else?

Hospitality trade bodies such as UKHospitality are warning that significant numbers of pubs, bars, restaurants and hotels are now losing money and are at risk of closure. Six in 10 businesses report that they have had to or are going to cut jobs and 63% have reduced operating hours thereby cutting staff wages in order to try to stay afloat. Over half are saying that they have been forced to cancel investment plans and 76% report that they have increased prices.

In a joint statement, the trade bodies said: “The Government seems to be setting itself up to miss its own targets with these most recent cost hikes for the hospitality sector.

“Hospitality is vital to the UK economy but is under threat from ongoing costs rises, which the April increases have only exacerbated. Jobs are being lost, livelihoods under threat, communities set to lose precious assets, and consumers are experiencing price rises when wallets are already feeling the pinch.

Government must act, urgently, to mitigate for changes in employers NIC’s and deliver on its promise of root and branch Business Rates Reform, the overall tax burden to the sector must be reduced including the long standing ask of a VAT cut for the sector”

So, is lowering VAT rates the solution?

Could the government be more sensible on business rates, or what about government backed loans at 0% interest- (banks aren’t lending to hospitality), possibly grants for businesses committed to using local suppliers and a real workable plan for apprentices, all this would help but only a little bit, it’s a starting point.

Something must happen, and soon, that’s for certain because once they’re gone there’ll be no bringing them back!