Tom Kerridge: Latest Budget ‘catastrophic’ for hospitality
Tom Kerridge fears measures from the government’s latest Budget will have a “catastrophic effect” on the hospitality industry.
Celebrity chef Tom, whose ventures include two Michelin-starred The Hand and Flowers and Michelin-starred pub The Coach in Marlow, was speaking in an interview with Sophy Ridge on Sky News’s Politics Hub.
Tom was among 120 business leaders who, ahead of this year’s general election, wrote a letter endorsing Sir Keir Starmer’s Labour party, for what they wanted to do for businesses, with a long-term growth strategy.
However, following the Budget delivered by chancellor Rachel Reeves, fears and frustrations are growing in the hospitality sector, with measures such as a rise in national insurance contributions set to hit the industry hard.
Tom said: “In terms of support for small businesses post-Budget, I think there’s a lot of business frustration.
“The hospitality industry always feels massively under pressure anyway. It’s run by people as a vocation and as a passion. Many places don’t often make profit. Most of them just struggle to break even, even in good times. But it’s run by people who absolutely love what they do. It’s a high-skilled industry, but it’s not always the highest of wages.
“But now there are a lot of back-of-house pressures. All of the costs have gone up behind the scenes. There’s no wiggle room, no manoeuvrability, there’s nowhere to change your business plan without passing costs onto guests. It’s a very difficult thing for hospitality to do. It’s already seen as an expensive treat, eating out, whether that’s a midweek pizza, even the price of a coffee or a beer, let alone Michelin-starred restaurants. To then pass any more cost on to the consumer is something hospitality needs to avoid.
“But the problem is, it is beginning to be suffocated and strangled a little bit by those ongoing costs, with many closures already happening.”
Discussing the changes to employers’ national insurance contributions, Tom added: “That’s a huge one for many employers. For us, we’ve calculated it’s around £850 extra per member of staff per year. So if you’ve got 200 members of staff, that’s an awful lot of money.
“But even smaller businesses with a workforce of five or ten, that does make a big, big difference coming into their bottom-line cost. It’s already a short-staffed industry.
“This is a very difficult time for hospitality, because the next few weeks are particularly busy. They give a false sense of feeling that everything is okay, because in the next few weeks there’s a lot of people going out, a lot of money being spent and that money gets spent on hospitality and retail. But it’s the other side, into new year, where it completely drops off a cliff. I think it’s going to have a catastrophic effect, moving into the new year.
“I think in all honesty there will be a huge amount of closures. We’ve already got high-profile names and Michelin-starred restaurants that are deciding to shut their doors, because it just cannot operate at a profit.
“When that starts to happen, it does begin to filter down. It’s not just the smaller businesses that are saying it. Big-name chains or breweries are starting to push the government.
“My mind is in two camps because I am a Labour party supporter and I do believe they are the right people to try and get this country into the right position and where it should be in terms of broken infrastructure. However, that infrastructure needs funding to get things right. An industry is built on a happy workforce.”
He continued: “I haven’t got the answer to it, but I do feel that the answer at the minute is not by making life harder for small businesses, because I think that knock-on effect is many people closing, people beginning to think this isn’t worth it, this isn’t worth the debt and isn’t worth the pain that they’re going to go through, which in turn has a knock-on effect on that workforce.”
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