Kate Nicholls: Our three-point plan for the Budget to fix hospitality

There is no doubt that the measures in last year’s Budget have proved devastating for our sector.

 

Two sites a day are closing and more than one-third of hospitality operators are cutting their opening hours because the cost of employment has risen to such as unsustainable level that they can’t afford to open and serve customers. All this has caused the loss of vital and much-needed jobs up and down the country.

 

The most recent Office for National Statistics data has shown that 64,000 jobs have been lost in just the past two months alone, with hospitality disproportionately affected, accounting for more than half of all job losses across the economy over that period.

 

The chancellor has a unique chance to shift the dial for our sector in her Budget next week. As we draw closer to this critical moment, we are redoubling our efforts to ensure she understands just how vital it is that the decisions she makes are for the benefit of hospitality. 

 

Only by creating an environment in which we can thrive can we fulfil our potential as a key driver of UK economic growth and job creation.

 

There are three key levers we are asking her to pull:

 

Fix business rates

The first is to fix the broken business rates system that unfairly punishes our sector by maximising proposed reforms and applying the maximum possible rates discount to all hospitality properties under £500,000 rateable value, as well as exempting larger properties over £500,000 rateable value from any surcharge.

 

As part of that reform, and for the government to truly deliver its manifesto pledge to level the playing field for the high street, we also need to see no penalty charge applied to larger hospitality properties.

 

Lower the NIC contribution

Another is to fix the issue of the changes made to employer National Insurance Contributions (NICs) in the last Budget – most notably the lowering of the threshold, which represented a significant part of the £3.4b additional annual cost that hit hospitality businesses in April.

 

We need targeted support to make it easier for businesses to hire young people and those returning to work. This will enable us to help people back into work and create jobs in communities up and down the UK for workers who may otherwise find it difficult to gain employment, such as those looking for their first job, those seeking part-time work, older workers and more.

 

Cut VAT

We are also asking for a VAT cut for hospitality, as we know this is a proven way to drive investment and make us more competitive with our global counterparts, thus driving tourism and spend. We currently have the second highest rate of VAT for hospitality and tourism in Europe, behind only Denmark, and there can be no doubt this is stymying growth and investment.

 

These will not be new messages for government. We have been consistent and forthright in our conversations in Westminster, Holyrood and the Senedd for some time. The launch and high profile of our #TaxedOut 2025 campaign has amplified our requests further and has greatly benefited from the sector putting its collective weight behind it. More than 345 sector chief executives recently signed an open letter to Rachel Reeves reiterating what we are asking for, and we’ve mobilised more than 1,500 people to send letters to their MPs highlighting the issues.

 

Support for hospitality among opposition parties continues to grow. The Liberal Democrats last week called for a 5% cut in VAT for the sector and the Conservative Party has pledged to completely abolish business rates for high street shops, pubs, bars and restaurants.

 

So, all eyes are on the government on 26 November to see if it will choose to back hospitality, to reduce our tax burden to help us get more people back into work, revitalise our high streets, reinvigorate our communities and support a growing British economy and hospitality sector.

 

Kate Nicholls is the chair of UKHospitality