Having survived 18 months of enforced closure and harsh trading restrictions, the hospitality sector is now not only facing a critical shortage of staff and severe supply chain issues, but the triple threat of punitive business rates, rent demands and an increase in VAT.
Under these circumstances, a targeted package of post-pandemic support for the sector is essential if it is to have any hope of a complete recovery.
In its Budget submission to the Government, UKHospitality is asking for measures including:
• Meaningful reform to the business rates system, including a differential, lower rate for hospitality, coming into force in April 2022
• A permanent rate of VAT at 12.5% for hospitality and tourism
• A strong, implementable, equitable code of practice that mandates a sharing of the pain of rent arrears between landlords and closed sectors, including a 50% rent debt write-off for tenants for all closed periods
• An increase to the primary threshold for employer National Insurance Contributions to £12k
• A lower level of excise duty for all categories of alcohol sold in licensed venues.
In addition, the body has laid out a strong case for the Comprehensive Spending Review to boost Government spending on tourism attraction, skills and apprenticeship funding, an extension to the Kickstart scheme and High Street regeneration funds. The submission also calls for a sustainable approach to setting future wage rates in order to avoid layering additional costs on fragile businesses.
UKHospitality CEO, Kate Nicholls, said, “The hospitality sector has proved before that it can lead the way out of an economic crisis and since our businesses were permitted to reopen in April 2021, we have seen strong employment growth. Given the right conditions we can continue to create jobs, rejuvenate high streets, generate billions in tax and contribute to growth.
“Of all the measures the Government could take to help the hospitality sector secure a more rapid recovery and rebuild resilience faster, the most effective would be to address the unfair business rates system, which requires the sector to overpay by 300% relative to its turnover; the £2.5 billion in rent debt accrued during the pandemic that currently weighs on the sector’s shoulders; and to retain the 12.5% VAT rate for hospitality and tourism to ensure the UK remains competitive in a global tourism market, along with providing consumers with continued affordable prices and creating 125,000 new jobs.”