A survey undertaken by UKHospitality (UKH), the British Institute of Innkeeping (BII), the British Beer & Pub Association (BBPA) and Hospitality Ulster (HU) has found that following the £3.4bn in extra costs that hit the sector in April, a significant number of pubs, bars, restaurants and hotels are now losing money and are at risk of failure
The findings lay bare the impact of recent increases to employer national insurance contributions (NICS) and the changes to business rates support on hospitality businesses.
The trade bodies said the effects are already so dramatic that Government targets, including ambitions to hit 80% employment and high street renewal, look doomed to fail as a direct result.
It added the fact one third of hospitality businesses are now operating at a loss, represents an 11 percentage point increase on the previous quarter.
Workers’ hours reduced
Furthermore, six in 10 report that they have had to cut jobs, and 63% have reduced the hours available to staff, in order to try to mitigate the increases and stay afloat.
The survey was undertaken last month (May) and is the first indication of the devastating effects of the changes that hit the sector in April.
More than half of operators said they have been forced to cancel investment and, with 76% of hospitality operators reporting they have had to increase prices, there is also a knock-on effect to consumers and the wider economy.
Operators are demanding action from the Government so the sector can thrive and play its full part in economic growth, job creation and high street revival, calling for a reversal to employer NICs changes, a VAT reduction for hospitality and expedited delivery of lower business rate multipliers.
Miss its targets
In a joint statement, the trade bodies said: “The Government seems to be setting itself up to miss its own targets with these most recent cost hikes for the hospitality sector.
“Hospitality is vital to the UK economy but is under threat from ongoing costs rises, which the April increases have only exacerbated. Jobs are being lost, livelihoods under threat, communities set to lose precious assets and consumers are experiencing price rises when wallets are already feeling the pinch.
“The Government must act urgently to mitigate for the changes to employer NICs and also deliver on its promise of root-and-branch business rates reform.
“The overall tax burden on our sector must be reduced, including consideration of the long-standing ask of a VAT cut for the sector, so the hospitality industry can return to investment, job creation and growth in communities the length and breadth of the country.”
