With one month to go until the Chancellor’s Spring Statement, Night Time Economy Advisor Sacha Lord and economic policy think-tank the Adam Smith Institute have released the ‘Last Orders Report’, highlighting the pressures faced by the sector.
The report also urged the importance of a “long-term” solution in the Spring Statement, set to take place on Wednesday 26 March.
Lord said: “New tax policies and rising energy and wage costs, combined with a cost-of-living crisis, meanwhile venues might still see footfall, the numbers simply don’t add up, and the pressures on the sector are now at unprecedented levels.
“Customers, particularly younger people, have less disposable income, while businesses face soaring costs that are pushing them to the brink, and pricing consumers out as a result.
“It’s a lose-lose situation, and without a considered, long-term approach, I fear we’re causing the industry irreversible damage.”
Long-term vision
He continued: “Both the previous and current Governments have exacerbated this crisis with short-term thinking and stopgap measures that fail to provide real security for businesses. I cannot understand the reluctance to set out a long-term vision we can all see, support, and trust in.
“If there is no clear direction for where the UK will be in 10, or even 20 years, it is impossible to understand the strategy, which is where mistrust, anger and division rises up.
“This isn’t about politics, it’s about securing the future of an essential industry. If businesses cannot see or trust in what lies ahead, they will turn to those offering an alternative path even if it leads in the wrong direction.
“This report is a call to policymakers to wake up and ensure the survival of pubs nationwide, before it’s too late.”
The data showed hospitality businesses could be hit with a £3.4bn tax bill in April due to upcoming changes to National Insurance, with operating costs already having surged by around 40% in the past year.
Meanwhile, 85% of businesses in the hospitality sector have planned to cut hours or salaries to combat cost pressures and 97% have frozen investment, stalling growth and innovation for the industry.
Incredible pressure
The report called for Parliament to implement a sector-specific VAT reduction to ease financial pressures on businesses as well as defer the introduction of a decreased rate to business rates relief to support struggling venues.
Other recommendations included rethinking the tax burden on hospitality and the planned increase to National Insurance, supporting high streets with hospitality-led regeneration and conducting a formal review of energy costs, which it described as one of the biggest financial strains on the sector.
Director of the Next Generation Centre at the Adam Smith Institute Sam Bidwell added: “Over the last few years, the hospitality sector has faced incredible pressure from a whole range of sources.
“These factors may all seem abstract, but it’s forcing thousands of pubs, clubs and restaurants to finally shut their doors for good.
“This isn’t just a calamity for the sector - it’s having a negative impact on the wider economy and our communities too.
“The Government needs to start backing our hospitality sector by liberalising licensing and planning rules and reducing costs. If it doesn’t, we’ll only consign more of Britain’s beloved pubs and eateries to history.”
