Hospitality Businesses Can be At the Heart of Economic Growth, but Further Support Critical to their Survival

Leaders of trade bodies representing pubs, brewers, bars, restaurants, hotels and consumers have written to the Chancellor following the mini-budget last week, highlighting the urgent need for further support to safeguard hospitality businesses

In the letter to Kwasi Kwarteng, representatives from across the hospitality industry thanked the Chancellor for his support following the business energy price guarantee, as well as his recognition that energy was not the only challenge to growth. They also recognised the positive approach he plans to take to reduce the huge burden of excessive business regulations and welcomed the freeze to alcohol duties.

They warned however, that these measures were simply not enough to safeguard the future of the sector. The combination of pandemic specific debts, minimal cash reserves, ongoing staffing issues and escalating inflationary costs across all areas for hospitality businesses, all against a backdrop of the cost-of-living crisis, was having a devastating impact.

In particular, small hospitality businesses operating at the heart of every community in the UK now face the biggest threat to their survival.

In the letter, the trade associations called on the Chancellor to recognise the vulnerability of the sector by providing urgent support in two key areas:
• An immediate reduction in the headline rate of VAT for hospitality on all food and drink sales
• Cancellation of business rates for the remainder of this financial year

In a joint statement the industry leaders said:
“Whilst the announcements made in the mini-budget will go some way to supporting our sector, the stark reality for many businesses is that they will still be facing energy costs of at least double those of 2021. At a time where crippling inflationary pressures across all areas of their businesses are already threatening their survival, this is not sustainable. Targeted support for hospitality businesses at the heart of their communities in villages, towns, cities and high streets across the UK will now be critical to ensure they can play a key role in the Government’s growth and levelling up agenda.”

“We need a plan for wide-ranging support that is in place for more than six months, allowing these businesses time to plan for their futures. The current uncertainty facing hospitality businesses is a huge barrier to growth and the immediate support we are calling for will give many the breathing space they need to ensure their survival past this winter.”

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Rt. Hon. Kwasi Kwarteng MP Chancellor of the Exchequer HM Treasury
1 Horse Guards Road London

SW1A 2HQ
28th September 2022

 

Dear Chancellor,

Hospitality businesses at the heart of economic growth with interim support

We are writing to you as organisations representing consumers, brewers, pubs and the wider hospitality sector following your growth plan announcement. Thank you for your support with the business energy price guarantee alongside your recognition that this was not the only challenge to growth. Even with your welcome intervention many hospitality businesses are now still expected to pay at least double the cost for energy from last year providing additional pressure to already fragile finances.

Equally your approach to removing barriers to enterprise is greatly welcomed particularly the focus on reducing business regulation. Our sector remains heavily burdened with excessive regulation limiting our ability to trade freely and fully. We will need real flexibility to rebuild and grow trade following the significant damage of the last two years of closure and restriction.

The specific acknowledgement of our sector through freezing alcohol duties and adapting the alcohol duty for draught beer is also hugely appreciated and will be critical to ensure our sector does not encounter additional barriers to its recovery. We would encourage the earliest implementation of these measures alongside the Alcohol Duty Review (ADR).

The measures you announced, whilst welcome, do not provide the urgent and immediate support that we will need to weather the coming incredibly challenging months. The combination of pandemic-specific debts, minimal cash reserves, escalating inflationary cost increases beyond energy, ongoing resourcing issues, exasperated through sector uncertainty and cooling consumer demands, threaten the survival of many, particularly the small hospitality businesses operating at the social heart of every community across the UK.

We are seeking your urgent support, particularly recognising the vulnerability of our sector, with two key areas;

  • an immediate reduction in the headline rate of VAT for hospitality on all food and drink sales including alcohol
  • Cancellation of business rates for the remainder of this financial yearThis investment in our sector, alongside the energy price guarantee, will prevent widescale unnecessary business failure and allow us to play our full part in your plan for growth. As a champion of our sector as the previous Secretary of State BEIS launching the first Hospitality Strategy, we know that you will appreciate the national capacity we have for economic growth, employment and investment in every community.

    This investment will allow our sector to be an integral part of your growth strategy and be an economic and social foundational element in levelling up in every area of the UK.

    As always, we would welcome any further engagement with you and your officials to discuss these proposals.

Yours sincerely,

Emma McClarkin, Chief Executive, British Beer & Pub Association (BBPA)

Kate Nicholls, Chief Executive, UKHospitality (UKH)

Roy Allkin, Chairman, the Society of Independent Brewers (SIBA)

Rick Bailey, Independent Family Brewers of Britain (IFBB)

Tom Stainer, Chief Executive, Campaign for Real Ale

Steve Alton, Chief Executive of the British Institute of Innkeeping

John Longden OBE, Chief Executive, Pub Is The Hub

Colin Neill, Chief Executive Hospitality Ulster

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