Opinion

'Hospitality left out in the cold by Chancellor's failure to plan'

By Sacha Lord, night-time economy adviser for Greater Manchester

- Last updated on GMT

Statement reaction: 'We are facing the worst cost of living crisis since records began over half a century ago,' Sacha Lord says
Statement reaction: 'We are facing the worst cost of living crisis since records began over half a century ago,' Sacha Lord says

Related tags: Legislation, Sacha Lord, Manchester

As is so often the case with big fiscal events, what is missing from a speech is just as important, if not more so, than what is actually said.

We have all known for months that urgent action is needed to address the crisis that millions of people and businesses are facing, struggling to pay their bills and keep their heads above water. But our Chancellor once again buried his head in the sand and stored up even greater problems that will come back to bite our economy in the months and years ahead.

We are facing the worst cost of living crisis since records began over half a century ago.

In one of the wealthiest countries in the world, it is simply unconscionable for the Government to step aside in the knowledge that over a million more of our fellow citizens - including half a million children - will be plunged into poverty, with millions more living in fuel poverty and forced to choose between heating their homes and feeding their families.

This crisis will affect businesses across the board too in a vicious circle that will severely damage our economy in the long term, and surely it is the job of the Government to step in and help people and businesses that are struggling today, not wish away problems

Hammer blow for businesses

Everyone knows how tough the past two years of lockdowns and restrictions have been for our hospitality sector, and we must acknowledge that operators have fought hard, and have actually been recovering well in the respite months since reopening, despite the Omicron surge hitting our vital festive period.

But the upcoming VAT hike next week, and the doubling or even trebling of energy bills on top of already soaring ingredients and production costs is a hammer blow for hospitality businesses - many of which are still saddled with huge debts from lockdown - and will threaten the fragile recovery in the sector.

Keeping VAT frozen at 12.5%​ was an absolutely vital move if we were to protect this fragile recovery, support operators that are currently staring down the barrel of bankruptcy and closure and protect jobs across the hospitality sector.

Two years ago, Rishi Sunak said that he would stand by business but last week’s statement shows that he has ignored and abandoned the hospitality sector once again in its time of need. Hiking VAT by 60% in the middle of this crisis is reckless and shortsighted and like others, I know this one move will result in more closures, more redundancies and more long-term damage to our economy and our communities.

As is the case for families up and down the country who can’t make ends meet because their energy bills have soared, inflation and energy price rises will heap unimaginable pressure on the financial viability of already stretched operators. Combined with the VAT hike, my very real fear is that this combination will now lead to many businesses going to the wall, taking jobs with them and leaving holes in the social fabric of our communities that will not be filled - especially in our most deprived or vulnerable areas who depend on their locals for social contact.

Paying the price

The very least our sector deserves is some level of support out of this crisis, so they can protect jobs and absorb costs to avoid further price hikes for consumers. As we have already seen, some operators have already been forced to reduce hours and increase prices for punters just to stay afloat.

A temporary measure of 50% relief in business rates​ is of course welcome as far as it goes for single-site operators, but the Chancellor’s Spring Statement is symptomatic of a wider misguided and short-sighted approach in general.

After all, these problems are not new. Analysts have been issuing warnings about our economic instability for months, and our ministers must take responsibility for a complete failure to plan for a scenario that has been clearly coming down the tracks.

Sunak promised a “stronger, more secure” economy. But that cannot and will not be achieved by leaving hospitality businesses out in the cold like this, and sadly it will be businesses, workers and their families who will now have to pay the price.

Related topics: Other operators

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