'We aren’t represented and our voices aren’t heard'

After a disappointing autumn statement for firms and professionals alike, with no immediate help on the horizon, a change of approach to support hospitality is sorely needed.

In an industry full of high-profile personalities, is it time a we appoint a unifying candidate to properly represent our interests? The Staff Canteen discusses what a new approach to a significant longstanding crisis could look like.

The United Kingdom's hospitality sector has found itself navigating treacherous waters, facing an array of challenges that threaten its very existence, with 3,766 firms closing between September 2022 and September 2023.

A once vibrant and thriving industry, encompassing restaurants, hotels, pubs, and other establishments, is now grappling with a perfect storm of issues that have converged to create an environment of uncertainty and difficulty.

Problems were compounded further following last week’s Autumn Statement, which offered few solutions to long-term issues plaguing the industry, despite hospitality being the third biggest employer in the country. 

Addressing the lack of support being made available, Kate Nicholls CEO UKHospitality, stated: “The overwhelming sentiment I’m hearing from the sector is frustration and I share those feelings. We were all hoping for more from the Chancellor and there are many businesses feeling like the measures announced won’t touch the edges.”

“The divide between bricks and mortar businesses and those that largely operate online is no longer a divide, it’s a growing chasm. It needs to be addressed,” she added.

"The overwhelming sentiment I’m hearing from the sector is frustration and I share those feelings."

Our CEO @UKHospKate reflects on a mixed Autumn Statement for the hospitality sector.

Read the full response here 👇https://t.co/6JFFqhROgT

— UKHospitality (@UKHofficial) November 24, 2023

An Industry in Crisis

Highlighting the myriad of problems that face hospitality, Paul Askew, Chef Owner of the Art School in Liverpool, discussed the scale of crisis.

“What we’re seeing now are the impacts of over taxation implemented by the Chancellor as well as the already perilously difficult to navigate industry pressures of energy costs, staffing, inflation and of course ignoring the call for VAT recalibration causing zero growth, further shrinking standards and quality and diversity in the sector,” Paul explained.

Lower VAT to 10% for the Hospitality Industry - Sign the Petition! https://t.co/JAv1MA4Yed via @UKChange

— Chef Paul Askew (@Porkyaskew) November 29, 2023

Following a lack of support, hospitality in the UK has significantly shrunk after restaurants, bars and pubs across the country closed up shop, due to a perfect storm of pressures being placed upon them.

Highlighting the impact wider impact to the country’s Michelin-starred chef Aktar Islam, Chef Owner of Opheem, explained: “Hospitality is an industry that needs to be preserved. For every pound we generate in sales we put more in to labour and the local economy then any other industry because we are a labour heavy industry.”

“We have nothing to work against our VAT”

For years now, firms and professionals across the industry have been calling on the government to reduce and change VAT for hospitality firms, with it being the key policy for businesses when discussing immediate support.

Explaining why a change in VAT is urgently needed, Michelin-starred chef Tom Shepherd, Chef Owner of Upstairs by Tom Shepherd, said: “How our VAT works unfortunately is the majority of our foods i.e. fresh food that we buy in is non-VATable but we have to charge VAT, so we have nothing to work against VAT. The majority of business outside of hospitality are able to offset their VAT with all their purchases but we’re not able to, and that's where it’s morally wrong.”

Despite calls from chefs, business owners, and industry bodies a like, the rate of VAT for hospitality providers has sat at 20% since April 2022, after it was reduced to 5%, before rising to 12.5% in April 2021, following the fallout of the COVID pandemic.

VAT, VAT, VAT !#cutthevat
1. It would encourage growth
2. Generate more in Corporation tax returns.
3. Rebalance the industries unfair tax system
4. Rise employment.
5. Drive down inflation
6. Cover business rates uplift.
7. Give parity with Europe@RishiSunak #AutumnStatement… https://t.co/6NaHOFESSg

— Andy Lennox (@andyjlennox) November 19, 2023

With the government showing no indication of changing the rate of VAT anytime soon, the industry has reacted with frustration and exasperation, with many accusing the government of treating hospitality as cash cow.

“If the industry keeps on contracting that VAT the government enjoys from us is going to disappear,” argued Aktar.

“Hospitality is being ignored, and the needs of hospitality are being ignored, and that’s why we’re seeing hospitality as industry contract. The only reason why our industry is being ignored is because we don’t have a voice,” he warned.

The Staff Canteen reached out to UKHospitality about their commitment in calling for a cut to VAT, with the group acknowledging the benefits of said policy. 

Commenting on this, UKHospitality responded: "UKHospitality has been calling for a cut to VAT for hospitality, tourism and leisure for some time. A reduced rate of VAT in the sector will help redress the imbalance between the UK and our nearest neighbours, which makes the UK uncompetitive to inbound visitors and more expensive for domestic tourists."

They added: "We believe this is the single biggest measure the Government can introduce to boost the sector, as it is proven to stimulate demand and generate revenue."

Does hospitality need a leader?

Despite hard work from industry bodies such as UKHospitality and indeed professionals such as Andy Lennox who has campaigned relentlessly for the hospitality industry, workers are wanting more.

“We need a relief or some sort of union, who can push our issues across to make a more even playing field for us to operate accordingly,” explained Tom.

Highlighting the lack of representation in and out of government, Tom argued: “Hospitality is a phenomenal industry. The fact that we haven’t got anyone who essentially represents us I think is quite possibly where the problem lies, because we haven’t got anyone making our thoughts and feelings appear relevant.”

Agreeing with Tom’s sentiments, Aktar said: “I believe for an industry that contributes so much to the country and it’s economy, the fact that we aren’t represented and our voices aren’t heard and we’re just left to deal with it, I think it’s quite absurd. We definitely need to find a way to get our voices heard.”

A Department for Hospitality

As the UK hospitality industry stands at a crossroad, it is imperative for stakeholders, including the government, business owners, and consumers, to come together to find sustainable solutions.

Supportive policies, such as targeted financial aid, tax relief, and initiatives to address the labour shortage, will unlikely come into place unless the industry is properly supported and has a seat at the table.

Discussing the idea of industry representation in government, Paul said: “Hospitality has become a tax cash machine for the Government and we must have proper representation with a single dedicated minister for Hospitality, not three individuals with different portfolios. Otherwise even worse is to come.”

Yesterday The Chancellor did the media rounds saying on Wednesday he will "remove barriers to business growth."

If he has listened to Hospitality, that will include reducing VAT to 12.5%.

Extending Business Rates Relief

Its not a question of growth, its a question of survival.

— Sacha Lord (@Sacha_Lord) November 20, 2023

One possible solution that has gained much interest from the industry is a committed department for hospitality, with a dedicated spokesperson to properly fight and manage the concerns of one of Britain’s biggest industries.

"It’s morally unfair that we can’t offset the VAT. We can’t put food costs against our VAT, it’s completely unfair. So, I would be all for a union, or a speaker, and I think hospitality would definitely benefit from that," explained Tom.

The Staff Canteen reached out to UKHospitality, asking their thoughts on whether the creation of a Department for Hospitality was something they supported.

Responding to our question, UKHospitality said: "We previously campaigned hard for hospitality to be recognised with a specific minister responsible for the sector. Currently this position is held by Kevin Hollinrake MP, the Parliamentary Under Secretary of State (Department for Business and Trade) with whom we work very closely."

They added: "The hospitality sector is a varied and wide-ranging one and so several departments hold responsibility for it – the Department for Culture, Media and Sport looks after tourism for example and the Department for Business and Trade has oversight of hospitality operators."

The challenges facing the UK hospitality industry are multifaceted and demand a comprehensive and collaborative approach for resolution.

The sector's survival depends on a concerted effort to address issues such as the lingering impact of the pandemic, labour shortages, rising operational costs, regulatory uncertainties, and shifting consumer preferences.

Only through collective action can the industry hope to reclaim its vibrancy and restore its position as a cornerstone of the UK economy and culture.