Two years ago this week, prime minister Boris Johnson told people to avoid pubs on 16 March 2020 and ordered their closure a few days later on 20 March 2020 without any financial backing therefore leaving the industry facing a complete collapse as the Covid pandemic began.
UKHospitality (UKH) chief executive Kate Nicholls tweeted earlier this week: “Two years ago today, the PM advised people not to go to pubs, bars and restaurants. Two years of restrictions have seen £160bn revenue lost and 10% of businesses close with recovery only starting this month. With the sector still fragile, increasing VAT now would be hugely damaging.”
UKH added those businesses that have survived are now facing soaring energy prices, rises in labour costs (19%), food (17%), drinks (14%) and operators are expecting to have to pass on an 11% increase in prices to consumers at a time when UK consumers are facing their own spiralling bills.
A call to Government to keep the VAT rate at 12.5% rather than revert back to 20% has been backed by MPs with an inquiry by the All-Party Parliamentary Group (APPG) for Hospitality and Tourism, concluding that VAT should not return to 20% this April, citing UKHospitality data revealing that the lower rate would bring benefits including jobs, international competitiveness and social wellbeing.
In its conclusion, the inquiry report stated: “The evidence submitted to the APPG … strongly supports the case for retaining the current 12.5% rate of VAT to support the industry in playing a key role in the UK’s economic recovery and the Government’s wider agenda, such as Net Zero and levelling-up.”
UKH chief executive Kate Nicholls said: “After two extremely challenging years and, with the unfolding cost-of-living crisis, there is now a very strong case for the Government to use the next Budget to deliver the vital support that these surviving and indebted businesses need, to protect jobs and defend the current fragile recovery.
“Holding VAT at 12.5% will provide vital support for thousands of small, local, community businesses. It will protect jobs at a pivotal moment for the recovery.”
Meanwhile the British Beer & Pub Association chief executive Emma McClarkin explained how severely the sector was hit back in March 2020 and how the Government can help now.
McClarkin said: “Two years ago this week marked the beginning of the biggest crisis the beer and pub sector has ever faced. Uncertainty loomed and closures followed for many, creating a hugely turbulent time for brewers and pubs alike. Throughout this period our sector showed its resilience and demonstrated that they truly are at the heart of our communities, fighting back strongly after each and every setback. Now the situation in Ukraine is adding further energy and inflationary pressures delaying our recovery yet again.
“As we move now to living with Covid as an endemic virus we are calling on the Government to invest in the sector for the long term and ensure our pubs and brewers have the right support for a strong and sustainable recovery. This is why we are calling on the Government to heed the calls of our Long Live The Local campaign on Business rates VAT and Beer Duty and to urgently aid the sector during this energy crisis.”
The Night-Time Industries Association (NTIA), which represents sector businesses that have, arguably, been hit harder than most said the way the Government has interacted with the industry during the past couple of years has led to nervous times for businesses and the public.
NTIA chief executive Michael Kill said: “Since that day in early 2020, when the Prime Minister told the country they shouldn’t go out to pubs, bars restaurants and theatres, almost two years on, we now realise it was the start of a long and arduous journey, which has culminated in a huge dent in confidence for our sector.
“As we start to recover, we are still suffering from the legacy of those comments, particularly around workforce and consumer confidence.
“The Government’s communication strategy and rhetoric around our industry has led to an very unsettling period for businesses, customers and staff, coupled with disproportionate public health measures presenting a narrative where the environments that we represent were deemed unsafe with no scientific evidence to back it up.
“From an industry perspective, we feel that we have been marginalised but must continue to fight for the Government to present a confident front for hospitality and the late-night economy.
“We must now rely on the chancellor once again, in his mini Budget, to sure up the financial support and relief to allow some headroom for businesses to survive, in light of the current debt levels and cost inflation.
“Billions in public funding must not be wasted by lifting taxes at the last minute to cripple an industry that has worked hard to survive, only to be let down at the last hurdle.”
Brink of business failure
Fellow trade body – the British Institute of Innkeeping (BII) – explained that even after businesses were taken to the edge of extinction, they now need more support from the Spring Statement.
BII chief executive Steven Alton said: “Since the prime minister announced people should not go to pubs, clubs and restaurants two years ago, our nations’ pubs have been taken to the brink of business failure and back on multiple occasions. With months and months of closures, disruptions to trade and lost revenues, the resilience of our sector has been tested time and time again.
“Now they can trade freely and fully once more, our members’ pubs continue to face huge challenges in inflationary costs for their businesses, from delivery driver shortages, to skyrocketing energy prices. While many are seeing an encouraging growth in trade as we head out of the pandemic, their margins are being squeezed across every area of their businesses with ever rising inflation in their supply chains.
“Passing these price rises onto consumers when they themselves are seeing pressure on their household income is not ideal, but for these vibrant and vital businesses to survive and thrive to face these challenges, they must use every opportunity available to them to recover and remain as sustainable businesses.
“Ahead of the Spring Budget, we are calling on Government to support them by keeping the lower rate of VAT at 12.5% for a longer period, cutting business rates even further and expanding the differential rate of duty on draught products to include smaller container sizes.
“Our sector can support the economic recovery of the UK, but we must have the support in place from Government to allow them to trade fully and rebuild their businesses in 2022 and beyond.”