Sector pleads with Chancellor to 'act now' and alleviate financial pressures

By James McAllister

- Last updated on GMT

Hospitality sector pleads with Chancellor to 'act now' and alleviate financial pressures

Related tags Government Finance Inflation

Chancellor Rishi Sunak has been accused of being 'out of touch with the reality of cost inflation' after failing to offer additional financial support for businesses in today's Commons statement.

Addressing MPs this afternoon (26 May), Sunak announced a £15bn package of support for households struggling with the cost of living crisis, part-funded by a £5bn windfall tax on energy companies.

They include an energy bill discount of £400 for every household in the UK, and a £650 one-off payment for families on means-tested benefits. 

Hospitality firms had hoped that the Chancellor would use today's speech to also to set out further support for business, amid recent calls from the sector​ for the Government to implement a temporary reduction in VAT on business energy bills in the face of rocketing inflation.

However, no such measures were forthcoming.

“[We] feel hugely disappointed and frustrated that the Chancellor and the Government has not taken the opportunity to fully support businesses within this announcement at such a critical time,” says Michael Kill, CEO of the Night Time Industries Association, which represents some 1,400 independent bars, clubs and live music venues across the UK.

“Time is running out for businesses, as costs ramp up, we continue to call for a reduction in VAT back down to 12.5% and an energy cap for SME businesses.”

Like the NTIA, the British Beer & Pub Association (BBPA) has also been calling for an energy price cap for small businesses to ensure fair energy deals for businesses across hospitality and beyond.

“It is right that the Government helps those who are struggling, however, this is an acutely painful time for business as well - we need the Government to act now and take measures to immediately bring down costs and alleviate the pressures on our pubs and brewers,” says Emma McClarkin, chief executive of the BBPA.

“The fortunes of our sector hang in the balance. Just as we emerge from the pandemic, we have immediately been hit by rising energy prices, food and supply chain inflation due to the war in Ukraine and a cost-of-living crisis that is severely impacting our ability to do business.

“A further package of small business support is needed to reduce the huge burden and allow pubs and brewers to get back on their feet instead of placing more barriers in the way of their recovery.” 

Back in March, a joint survey by leading trade bodies including the BBPA and UKHospitality found that soaring energy costs were forcing some hospitality businesses to raise their prices and cut trading hours​.

The poll found that 76% of businesses are mitigating skyrocketing energy costs by reducing their gas and electricity usage and raising prices, while 38% have cut their trading hours.

In response to today’s announcement by the Chancellor, UKHospitality chief executive Kate Nicholls says the latest financial package is a 'welcome signal' that the Government is targeting inflation.

“Direct, focused cash payments for lower income households will hopefully shore up some consumer confidence, but now we need a commensurate focus to reduce the costs of doing businesses, to reduce further price rises,” she says.

“The Government needs to identify and accelerate policies that will cut costs, minimise red tape and accelerate growth.

“A reiteration of its commitment to cut business taxes to incentivise investment in high streets, people and innovation would also help to settle nerves across many sectors, including hospitality. Then we can collectively take a longer term look at the best raft of measures for inclusion in the Autumn Budget.”

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