Kate Nicholls: 'the new prime minister must act now and act decisively to support our industry'

06 September 2022 by
Kate Nicholls: 'the new prime minister must act now and act decisively to support our industry'

Kate Nicholls asks for action from the new prime minister Liz Truss to help hospitality survive the multiple threats facing the industry

The hospitality industry's case for support is clear, urgent and immediate in the face of seemingly insurmountable barriers to its recovery and future profitability – its very survival, even.

Our desperate need is for a very early announcement from new prime minister Liz Truss, and we're anxious for the repeated promise of day one action on energy costs to be kept.

Because action now will protect jobs, businesses and the wider UK economy and, lest we forget, protect the investment the government made in its support for our sector during the pandemic.

Hospitality operators are facing average annual energy bill increases in excess of 300%, while others are facing even greater price hikes, or cannot secure gas and electricity supply at any price, whether through their own efforts or those of energy brokers, as suppliers simply withdraw offers from the hospitality sector. In a radio interview last week, Tom Kerridge said one of his sites faced a monthly energy bill rise of £5,000 per month to, wait for it… £35,000, when the current contract ends in December. Get that! From £60,000 per year to £420,000.

Chronic challenges in the supply chain, labour shortages, interest rates and inflation all pose serious risks to businesses and jobs

And, of course, mammoth energy costs aren't the only threat facing hospitality right now: chronic challenges in the supply chain, labour shortages, interest rates and inflation all pose serious risks to businesses and jobs.

Which is why UKHospitality is imploring – nay beseeching – the new PM to act now and act decisively to support our industry, including introducing measures such as: a 12.5% VAT rate, a business rates holiday for all hospitality premises, with no caps applied; the deferral of all environmental levies; the reinstatement of a generous Time to Pay scheme from HMRC, freeing up cashflow; and reintroduction of a trade credit insurance scheme for energy. Action by regulator OFGEM would also help to ensure that the energy market is competitive.

Without this sort of support, there's little doubt that many UK hospitality venues, especially those reliant on seasonal guest bookings, simply won't survive to see the New Year, with the domino effect of local job losses and lost revenue for those local companies supplying and providing services to those venues.

Are there any positives in all this, any silver linings? Remarkably, there are. Hospitality businesses must now see that in the longer-term they have to drive efficiency, while at the same time investing in green energies, though we'll need government incentives to support this.

And while the Tory leadership contest proved ill-timed, it did at least give us all time to sit back and analyse dispassionately what will work and what won't, as the UK looks around the world at other governments' attempts to tackle the energy crisis. And the big lesson is surely that rushed policy decisions are almost always misguided. The bottom line is that there's going to be a long-term benefit to this ‘pause', as frustrating as it has been.

Let's be careful, too, not to undermine the investment appeal of our sector, because this, after all, is a temporary crisis. An acute crisis, no doubt, but one that the ever-resilient, ever-resourceful hospitality industry can and will get through.

Needless to say, UKHospitality is working very closely with industry partners to share best practice with members around confronting all of the challenges facing the sector, and this collaboration will be vital in getting out the other side.

And how about this as an approach during the next 12 months? Let's treat hospitality as a haven for our guests and our communities, because those able to continue to enjoy a meal out or drinks with friends are going to be even more vital to the sector and its future. People should be made to feel that their little luxury in a sea of deprivation really is something to be looked forward to.

With that attitude and the energy cost action promised by the new PM, hospitality can at last begin to build back.

Kate Nicholls is chief executive of UKHospitality

Image: Paul Griffiths

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