After Chancellor Kwasi Kwarteng’s recent announcement of the mini-Budget, UK Hospitality outline what could further help the hotel sector financially.
Hotel operators will no doubt have breathed a small sigh of relief at the announcement that energy prices for businesses are to be capped, and will have largely been encouraged by Chancellor Kwasi Kwarteng’s recent mini-Budget.
But they, like the rest of the still beleaguered hospitality industry, need more – much more – support, and for much longer, if they’re to make a full and proper recovery from the ravages of the past two-and-a-half-years.
Yes, energy support is of course most welcome, as is the reversal of the 1.25% National Insurance contributions increase, while the Government’s Growth Plan will likely generate some really positive outcomes for hospitality businesses in the medium to long-terms.
But two things that would really make a difference are still conspicuously missing from the support package, namely a VAT reduction for the hospitality sector – the pandemic’s 5% and 12.5% rates were undoubtedly a huge help – and a radical overhaul of business rates, so that they’re no longer an onerous and unfair burden on so many sector operators.
Without those two vital elements, we believe many hotels won’t survive long enough to begin to reap the benefits of the growth we’re all now hoping to see, or the advantages of what looks like being a more competitive tax regime.
We feel so strongly about VAT – indeed, we campaigned hard to try to prevent its return to 20% for hospitality – because ours is the highest VAT rate in Europe, which is starkly at odds with the UK’s ambitions for global tax competitiveness. Fingers-crossed, then, that it’ll be addressed in November’s autumn Budget, if not before.
A lower VAT rate combined with business rates reform would help hotels keep prices down for guests, thus improving their chances of survival, which of course means safeguarding thousands of jobs which might otherwise be lost.
So while hotels have been given a little breathing space, and will now be better able to plan ahead, there remains a clear and dangerous shortfall between the positive tax plans that have been announced, and the absence of much-needed immediate business support.
Rest assured that UKHospitality will be continuing to press government for that urgently required help for hotels and for the wider hospitality industry.
Kate Nicholls
Chief Executive
UKHospitality
