Kate Nicholls, UKHospitality: 'The government needs to tackle the cost-of-living squeeze from the customers’ point of view and tackling the cost of doing business from our point of view'

The Spring Budget, due to be announced on Wednesday 23rd March, will not be “very intense in policy” for hospitality, says Chief Executive of UKHospitality Kate Nicholls

Tomorrow, Rishi Sunak is due to deliver the Spring Statement, which is one of the two statements Her Majesty's Treasury makes every year to the Parliament upon publication of the economic forecasts.

The pressure is high on Rishi Sunak with hopes of him easing the cost-of-living crisis that has recently taken over the UK. Coronavirus and Brexit have only exacerbated the situation.

More than 250 hospitality business leaders, including pioneering voices in the pub sector, recently penned a letter to the Chancellor regarding the Spring Budget and, by tomorrow, the future of many hospitality businesses will be known.

In an interview with The Staff Canteen, Kate Nicholls, Chief Executive of UKHospitality, said that businesses are “really concerned” about the spring statement, as there are “five big challenges" that the industry is facing at the end of March.

“The VAT rate goes up, business rate bills kick back in, you’ve got NICs and the National Wage increase and, of course, a huge haul of the operating costs," she explained.

“Operating costs in the sector are already running at about 13% energy and food being top of the list. So operators are going to find it very tricky to manage that. That eliminates their margin.

“At the same time, you’ve got a cost-of-living squeeze, which means the customer demand might also shrink.”

Nicholls further added that  the government needs to tackle all of those things, "the cost-of-living squeeze from the customers’ point of view, and tackling the cost of doing business from our point of view. We are really concerned that Covid-19 support like the VAT is going to taper too soon.”

During the pandemic, the VAT fell from 20% to 5% and was increased to 12.5% in October 2021. The VAT is expected to return to the standard rate of 20% from April.

In 2020, the government announced 100% relief to the Retail, Hospitality and Leisure Business Rates. This continued until July 2021, when it was announced that 66% relief will be offered till March 2022, which will soon drop to 50%.  

“For smaller business, they have a little bit of protection because they will get 50% off their business rate bills, so anybody who’s a single site, independent operators will face a little bit off their bill”, said Nicholls.

“But it is still difficult to be able to introduce any form of business rates payment back into the system at this point in time, when business are facing such uphill tasks, with cost price inflation on energy, on food and on labour.

“So I think it is going to be hugely challenging and of course for many businesses you have also got rent protections lifted and insolvency protections lifted, so they are going be exposed on those areas too.

“I think the next 12 to 18 months will be more difficult than the last 18 months that we’ve gone through with Covid-19.”

By Bianca Jashnani