‘Hospitality can help reduce inflation’

By Nikkie Thatcher

- Last updated on GMT

Government requirements: UKHospitality issues a number of asks in its Budget submission to help reduce inflation (image: Getty/Richard Drury)
Government requirements: UKHospitality issues a number of asks in its Budget submission to help reduce inflation (image: Getty/Richard Drury)

Related tags Legislation Finance Government

UKHospitality (UKH) has highlighted how the sector can help reduce inflation and deliver growth if given the right support on energy.

According to UKH, without any Government intervention, cost pressures will intensify and drive prices up with most operators looking to hike prices by 6% to 10% when energy support is cut from April.

In its Budget submission, the trade association issued a number of asks to the Chancellor including a new, lower business rates multiplier.

It has also asked for the Government to implement minor, short-term immigration reforms in a bid to counter the sales being lost due to labour shortages, particularly scrapping or reducing the Immigration Skills Charge and offering more flexibility to students to work longer hours.

In addition, UKH called for a reform to the apprenticeship levy to help enable funding to be used for other forms of training and change its operation to offer greater flexibility to employers and employees over training while incentivising economically inactive people into work.

Association asks

UKH has also urged the Government for a temporary, reduce rate of VAT and the trade body also called for clear direction to OFGEM to intervene in the non-domestic energy market and instruct suppliers to renegotiate over-inflated contracts.

UKH chief executive Kate Nicholls said: “Inflation is the millstone that hands around all our necks and the Government has made it clear tackling these cost increases is a key priority.

“We agree and the Chancellor can take a significant step towards achieving that in the Spring Budget by unlocking the potential of hospitality.

“Our venues have been ravaged by cost increases in every area – whether that’s energy, food, drink or recruitment.”

As a result, firms have had to hike prices for guests, which has contributed to inflation, Nicholls said.

Part of the solution

She added: “No business wants to increase its prices. Hospitality wants to be part of the inflation solution, not part of the national problem.

“There are measures that can be taken to somewhat relieve these pressures on venues and allow them to take advantage of demand, increase sales and keep prices low.

“For example, reforming the apprenticeship levy and offering employers more control over the delivery and funding of training would allow many of the economically inactive get back into work, at almost no cost to the Government.

“While we also recognise the public purse strings are being held tight, there is a strong argument to tackle the tax burden on businesses in a responsible way.”

She outlined how a temporary reduced rate of VAT would reduce costs, which would help lower inflation and drive demand and growth.

“We saw its success during the pandemic and that can be replicated now. The sector has shown its potential to deliver rapid economic growth and tackle inflation – something the country desperately needs and the Chancellor has the power at the despatch box on 15 March to enlist hospitality to help achieve his aims. I would urge him to do just that,” Nicholls said.

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