Turn the Tables: Govt vs The Hospitality Sector
Conservatives warned voters that Labour would “ Tax, Tax, Tax .. it’s in their DNA”, we warned.
Just weeks into the new budget the personal stories abound of financial pain that will fundamentally change the decisions and lifestyle of businesses and customers around the UK: in the spotlight, the National Insurance Impact on High Street Hospitality, Bars and Restaurants.
After covid lockdowns and social distancing, inflation, eye-watering energy bills, alcohol tax increases, tronc legislation, calories and ingredients declaration regulations, ULEZ and train strikes, business rates, the end of VAT relief and the end of tourist tax relief - the hospitality sector is only just getting back its determination to succeed against the odds. The National Insurance tax rises, Minimum Wage increase, and New Workers Rights this month have hit the sector for six – Again. Can it survive? In France we have seen many small restaurants open to set hours reservations only run by an over-worked and underpaid skeleton staff. Will that be the inevitable business model here too ?
“Had I known what the current financial climate was going to be like now, and the lack of consumer confidence, I wouldn’t have bought this place,” Collins, a city hospitality owner who has just opened a new site investing £1.2m, told The Telegraph. “It was quite a tricky deal. It took a lot longer than expected, and since then the world’s got worse, which no one was expecting. So, if I could turn back the clock, I wouldn’t have done it. I can’t see us making any money in the next financial year, and that’s with opening a brand-new site, so the coffers are empty. We did our calculations in November, and just with the national insurance rise and the living wage rise, we needed to find, as of 1 April, an extra £300,000 per year. Lunch has just fallen off a cliff, and you’re now up against everyone discounting, especially the groups that have private equity backing.”
Collins is also facing pressure from suppliers who are attempting to pass the impact of the tax rises down the supply chain. “Our big food supplier has just tried to pass on the 5% uplift,” he said. “Everyone’s trying to pass it on someone else. It’s a never-ending story.” Ultimately, he said, it would be a lot easier to just “shut up shop”, but said the company employs 220 people and “we’re not going to let them go”. He added: “We’re a key pillar of the economy. We support jobs, communities, recovery. Hospitality brings people together. It’s full of passion and potential. The red tape needs to be cut, the tax load needs to be eased, and then we can just do what we do best.”
This story is repeated many times over in this critical sector which employs one in ten people in the country many of them young and often their first job playing a crucial role in training. New sites mean more employees and therefore more PAYE tax for the government – so the NI increases are a home goal against growth and against jobs. Pubs, Bars and Restaurants are at the heart of our community, social fabric and lifestyle – so this phenomenon impacts everyone. “The impact on the economy will be enormous, but the long-term damage to our unique heritage and the social fabric of our nation will be devastating,” Collins said.
