In the wake of the recent increases to employer National Insurance Contributions (NICs) and the changes to Business Rates on hospitality businesses, UKHospitality, The British Institute of Innkeeping, the British Beer & Pub Association and Hospitality Ulster have carried out joint survey that reveals one third of hospitality businesses are now operating at a loss.
This represents an increase of 11 percentage points on the last quarter.
Six in 10 businesses report that they have had to cut jobs, and 63% have reduced the hours available to staff in order to try and mitigate the increases and stay afloat.
Furthermore, over half of operators said they have been forced to cancel investment, with 76% reporting they have had to increase prices.
The trade bodies warn that 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.
“The Government seems to be setting itself up to miss its own targets with these most recent cost hikes for the hospitality sector,” says the trade bodies, in a joint statement.
“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.”
Operators are demanding action from the Government and calling for a reversal to employer NIC changes, a VAT reduction for hospitality, and expedited delivery of lower business rate multipliers.
“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,” the statement continues.
“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.”