Hospitality CEOs call for action in upcoming budget

Bosses from across the hospitality sector are among the 112 signatories who have penned an open letter to the chancellor, urging the government to take immediate action at the budget announcement on 6 March to prevent further business failure. 

In the letter, trade body UKHospitality and business leaders highlight how running costs, labour shortages and the cost of living crisis have led to an unprecedented surge in closures, among both high-profile brands and local community venues. 

The letter coincides with new data that shows that 74% of consumers think hospitality needs and deserves more support from the government. The data from Zonal and CGA by NIQ found that 64% of consumers also believe that hospitality plays a vital role in their communities, indicating clear public support for backing the industry in the upcoming budget. 

Budget priorities for hospitality businesses

Signatories, which include restaurant operators, global hotel brands, pub groups and leisure parks, support UKHospitality's calls for the chancellor to put a cap on business rates increases from April 2024 at 3%. The Autumn Statement 2023 announced a significant 6.7% increase in the multiplier for 'large properties'. This is likely to be more than double the rate of inflation when it comes into effect, putting further upward pressure on the headline rate. Signatories have also urged the devolved governments to pass on the relief in full. 

The letter calls for the government to introduce a temporary cut in the lower rate of Employer National Insurance Contributions to 10%. The sector says it supports measures to create a higher-wage economy but the record increase in the National Living Wage will create major cost pressures for a labour-intensive sector like hospitality. A share of the burden between government and industry would reduce the pressure on price increases.

Signatories have also asked ministers to review the benefits of a reduced rate of VAT for the sector to 12.5%. The UK's current rate of VAT is uncompetitive internationally and leads to higher prices, say sector representatives. Reducing VAT for hospitality and tourism is a globally recognised tool to boost tourism, support employment and generate growth while constraining prices. 

'Make or break'

Kate Nicholls, chief executive of UKHospitality, comments: "The sector's message to the chancellor is loud and clear: without further economic support at the upcoming budget, we risk losing more of our institutions and doing irreversible damage to our world-leading hospitality sector. 

"Extortionate operating costs are making it incredibly challenging to run a profitable business, so it's vitally important that this is addressed in order to ease ongoing cost pressures and protect businesses from the threat of closure. 

"This sector is one of the UK's leading employers, providing work to more than three million people, and contributing more than £93bn to the economy each year. It not only deserves the support we are collectively asking for, but it needs it.

"I sincerely hope that this letter, supported by leading individuals from across hospitality, will be enough to convince the chancellor that his actions on 6 March will be make or break for many venues up and down the country."

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