By Denis Sheehan, Publisher, H&C News: The Chancellor has to act tomorrow to avert the cost of living crisis creating a cost of hospitality crisis.
Monitoring hospitality’s pulse…
The current cost of living crisis is progressively forcing people to face household budgeting dilemmas unseen for decades.
Average household bills like gas and electricity are predicted to rise to as much as £3,000 – petrol has increased by more than 50% in the past 12 months – inflation hit a 30 year high in January – all cost indicators are upward, and steeply.
As household budgets are squeezed, consumers will squeeze non-essential spending including going out to eat and drink.
The Chancellor over the weekend in numerous interviews repeated a line to caution optimistic predictions of his Spring Statement, ‘we can’t help everyone’. Not only did he restrain hopes for help, but he also seems intent on implementing a rise in both employees’ and employers’ National Insurance contributions. As well as VAT for hospitality.
NI Rises are far higher when scrutinised
- For employees with annual earnings between £9,568 and £50,270 the National Insurance rate increases from 12% to 13.25%, an increase of 10.4%.
- For employers the rate of NI increases from 13.8% to 15.05% for all income per employee above £8,840 per annum – so this becomes an effective increase of over 9%.
VAT Rises are also far higher when scrutinised
- Hospitality currently charges VAT at 12.5% set to increase to 20%, an increase of 60%.
The cost of living crisis will cause a great many consumers to reduce or eliminate going out to eat or drink through necessity.
These pressures are on top of record levels of job vacancies currently driving labour costs upward.
Hospitality and particularly pubs also suffer from antiquated business rates.
Since 20 March 2020 lockdowns have decimated the hospitality industry, countless businesses are no more. Despite glimpses of hope and optimism through the past two years the recent escalation in the price of energy alongside so many other upward cost pressures will add to the list of business casualties.
The Chancellor has to act tomorrow to save hospitality.
