New data indicates that the consequences of the Autumn Budget have plunged a large chunk of hospitality trade at risk of closure, with business owners being forced to cut jobs, hours, and raise prices just to keep afloat.
A new survey of hospitality operators has laid bare how starkly the recent increases to both employer National Insurance Contributions and the changes to business rates have impacted hospitality businesses.
According to trade association UK Hospitality, the collated cost of the Treasury’s new measures comes at a cost of an additional £3.4bn to the sector: with the knock-on-effect now being so dramatic that government economic targets, including ambitions to hit 80 per cent employment alongside wider high street renewal, look doomed to fail as a direct result.
New research, undertaken jointly by UK Hospitality alongside the British Institute of Innkeeping, the British Beer & Pub Association and Hospitality Ulster, found that one third of hospitality businesses are now operating at a loss: representing an 11 percentage point increase on the last quarter.
Meanwhile, 50 per cent of sector businesses claimed to have halted reinvestment efforts, six in 10 said they have had had to cut jobs, with the same ratio saying they’d reduced hours available to current staff, all in order to try and mitigate the increases and stay afloat.
Furthermore, a whopping 76 per cent of respondents said they’d had to increase their prices in order to keep their heads above water: with obvious repercussions for consumers.
The survey was undertaken last month and is the first indication of what UK Hospitality has called the “devastating effects” of the changes which hit the sector in April.
For its part, ever since the announcement of the Autumn Budget, UK Hospitality has consistently called for the reversal to the employer NIC changes, as well as for a bespoke VAT reduction for hospitality and an expedited delivery of lower business rate multipliers.
“The Government seems to be setting itself up to miss its own targets with these most recent cost hikes for the hospitality sector,” read a joint statement on behalf of the sector bodies behind the survey. “Hospitality is vital to the UK economy but is under threat from ongoing costs rises, which the April increases have only exacerbated.”
“The Government must act urgently to mitigate for the changes to Employer NICs and also deliver on its promise of root and brand Business Rates reform,” it added. “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.”
