NTIA warns 1 in 4 NTE firms at risk in next 12 months

06-Mar-2023 - Last updated on 06-Mar-2023 at 11:18 GMT

Heart-breaking: NTIA report shows 1 in 4 night-time economy businesses at risk of closure over the next 6 months (Credit: Getty/allanswart)

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About one in four independent and culture businesses are at risk of “being lost” in the next six months, the second Night-Time Industries Association (NTIA) Night-Time Economy Report has revealed.

The report showed more than half of night-time economy (NTE) businesses had seen trading costs increase in excess of 30% compared to pre-pandemic levels while more than 70% were barely breaking even or losing money in the current financial climate.

Additionally, research figures from CGA AlixPartners, which contributed to the report, unveiled a 13% contraction in independent businesses compared to only a 3% contraction in managed businesses.

NTIA CEO Michael Kill said: “Independent businesses make up more than 70% of our industry and are so important to economic and cultural recovery.

Heart-breaking

“These businesses shape communities, generate social cohesion, visitor economy and have a huge part to play in shaping our world-renowned nightlife and cultural tapestry.

“[They] are owned and operated and worked in by members of the community they serve.

“It is heart-breaking to hear of so many being lost, and the potential to lose so many more.”

According to the report, in 2018 the NTE sector totalled 425k jobs and 38k businesses, however, by 2021 this had fallen to 392k jobs and 34k businesses.

Furthermore, over the decade prior to the pandemic, night-time culture economy (NTCE) firms generated 1.64%, or £36.9bn, towards the UK’s Gross Domestic Product (GDP), though this fell to £29.4bn in 2020 and £24.1bn in 2021.

Financial headroom

Moreover, in 2018 the Gross Value Added (GVA) of the NTE was £46.4bn while the GVA for NTCE businesses stood at £11.6bn, reducing to £34.5bn and £8.5bn respectively in 2021.

The NTIA claimed these figures were likely due to closures and a reduction in consumer spending with the industry operating on increasingly smaller margins.

In addition, the report showed 65% of respondents were unsure they would survive the next 12 months without further Government support.

To ensure the survival of these businesses, the NTIA has called on the Government to reduce the VAT rate for the sector to 10% for the next 12 months and restructure the Energy Relief Scheme to deliver reasonable rates across the industry in the upcoming Spring Budget.

Kill added: “The Government must recognise the importance of these independent businesses and culture in all its forms and support them in the coming budget to ensure they have the financial headroom to survive, because when they are gone, they will never come back.”