Sector is being priced ‘out of existence’

24-Apr-2024 - Last updated on 24-Apr-2024 at 14:48 GMT

System overhaul: business rates, VAT and employer costs must be reduced says SLTA MD Colin Wilkinson

Related tags SLTA Government Colin Wilkinson ukhospitality

Hospitality is being priced out of existence as sites “go to the wall” every week, according to trade bodies representing businesses across England, Scotland, Wales, Northern Ireland and the Republic of Ireland.

Attendees at a meeting in Belfast have called on suppliers and governments to help the sector before it’s too late with an entire new taxation system being key to helping the on-trade survive.

The conference, hosted by Hospitality Ulster, was attended by UKHospitality, the Federation of Licensed Victuallers Associations, the SLTA (Scottish Licensed Trade Association) and Vintners Federation of Ireland, with those present warning irreparable damage is being done to the sector through price increases, government inaction and failure to mitigate surging costs.

According to the SLTA, the groups said that faced with price increases from suppliers, increased labour costs and reduced consumer spending power, hospitality businesses have been forced to increase prices and reduce staff as many struggle to break even and others are going out of business as they simply cannot cover the costs.

New taxation model

And while news headlines show a reduction in inflation, this is only because some consumer products prices have fallen while others, like alcohol, continue to rise. In essence, prices are rising slower than last year but they are still rising and still putting pressure on hard-hit consumers.

It added the trade bodies have fixed their focus on their respective governments and stated the biggest cause of businesses failing was government failure to realise the world had changed and hospitality businesses need a new taxation model to survive.

SLTA managing director Colin Wilkinson said: “At what point do governments actually start to realise the pressure that the licensed hospitality sector is under here?

“We are seeing in the media that there is a steady stream of establishments going to the wall each week – pubs, bars and restaurants that have been in business for years are being lost. We all see it, they must too.

Government approach must change

“The pandemic, the cost-of-living crisis and ever-shifting consumer trends have all had their individual impacts, yet the approach government has towards taxing the sector hasn’t moved with the new realities.

“There is no alternative. A contracting licensed hospitality sector won’t just bounce back – it is being attacked on multiple sides. Many operators are just keeping their heads above water and are financially struggling to make ends meet. We are not talking about balancing a monthly cash flow here, we are talking about the complete depletion of cash reserves and savings to try to save the last vestiges of hope.

“It’s long overdue that the entire taxation system around the licensed hospitality sector is reviewed – VAT, rates and employer costs must be reduced. These are all within the control of local and national governments.

“We are constantly forced to fight fires every single day, which leaves little time to look to the future of the sector. The odds seem to be stacked against us, and we must ask to what end? If governments tax us out of existence, then they won’t have the benefits of what we know was once a vibrant sector ever again.”