Hospitality sector faces 'hundreds of thousands of closures' unless Government acts on energy crisis

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- Last updated on GMT

Hospitality sector faces 'hundreds of thousands of closures' unless Government acts on energy crisis

Related tags Liz Truss Energy costs Government Inflation ukhospitality Hospitality Cost of living

Hospitality leaders are piling pressure on the Government and newly-appointed Prime Minister Liz Truss to act on spiralling energy costs, saying that hundreds of thousands of businesses will close if it doesn’t.

Newly formed #BusinessSOS campaign, founded by organisations representing more than 150,000 retail, leisure, hospitality and tourism businesses, says that harm caused by the spiralling energy crisis is superseding the pandemic, with the potential to cause irreversible damage to UK high streets and the economy.

The campaign, which is backed by trade bodies including the British Beer and Pub Association, Night Time Industries Association, UKHospitality, and Croydon BID, is calling on the Government to introduce a three-point plan to help businesses.

The calls follow rumours of an energy prize freeze being introduced by new Prime Minister Liz Truss, with the Government due to make an announcement of how it will deal with the current energy price crisis later today (8 September).

Aspects of the three-point plan include the headline rate of VAT reduced from 20% to 12.5% and business energy bills reduced from 20% to 5% to match domestic billing; a 100% business rates relief until 31 March 2023; and a discounted kwh price on all business energy bills.

“The new Prime Minister has days to save the high street as we know it. The impending announcement on how the Government will tackle the energy crisis facing businesses will either ensure businesses can remain trading or set in motion mass closures and redundancies,” says Matthew Sims, founder of the #BusinessSOS campaign and CEO of Croydon BID.

“To say the energy crisis is worse that the pandemic is not an understatement, it is the reality facing businesses today and why the clock is ticking for the new Government to provide clarity and introduce measures providing tangible and immediate relief.”

One in five businesses won't survive without support

In a separate move, 300 hospitality CEOs have signed a letter asking the Chancellor to urgently deliver a package of support to help the sector.

Leaders from businesses including Just Eat, Marriott International, Mitchells & Butlers, Pizza Hut UK, Caffè Nero and Merlin Entertainments as well as from dozens of smaller pubs, bars, restaurants and hotels in England, Scotland and Wales have signed an open letter asking new Chancellor, Kwasi Kwarteng, for ‘a plan that cuts business costs, stimulates demand and tackles inflation’.

Unlike #BusinessSOS campaign, the letter outlines a five-point plan of action for the Government, including a 10% headline VAT rate for hospitality; a business rates holiday for all hospitality premises, with no caps applied; deferral of all environmental levies; the reinstatement of a generous HMRC Time to Pay scheme; and the reintroduction of a trade credit insurance scheme for energy

The calls for support come off the back of new figures from UKHospitality that show that one in five businesses will not survive the current crisis and that three in five operators are no longer profitable.

The figures, from a recent survey of operators in the sector, also show that, on top of energy price rises, the cost of living crisis will cost an anticipated £25bn loss in trade, likely to result in a 15% drop in employment, the equivalent to 383,000 jobs across the UK, says UKHospitality.

“The hospitality sector is critical to our national economic and social recovery and with support will be well placed to drive growth, generate jobs and invest in local communities. To achieve this however, the new Government needs to act quickly to address the soaring energy costs that are strangling the sector,” says UKHospitality CEO Kate Nicholls.

“We are encouraged by talk of energy price freezes for families and businesses but this won’t be enough to save hundreds of businesses and thousands of jobs in the sector.

“The package of five measures we are asking for will help us guarantee jobs and wages, to ensure that businesses stay afloat, and to preserve and grow our communities across the UK.”




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