As he continues to make the case for why the government should take steps to stop even more hospitality closures, Edmund Weil highlights some of the campaigns that have been very visibly ruffling feathers of late
Regular readers of this column will forgive me, I hope, for returning once more to the economic pressures bearing down on our industry. I have written about rising costs, shrinking margins and governmental indifference before – probably more times than either you or I would like.
But things have not stabilised. They have got worse. In the first quarter of this year, the UK lost hospitality venues at a rate of more than three per day. Last year saw 3,353 hospitality insolvencies – the third highest of any sector in the economy. The calculus remains brutally simple: every line of cost is rising while demand softens and our ability to raise prices is, for all practical purposes, nil.
You know all this. You are living it. So rather than rehearsing the litany again, I want to talk about what is actually being done about it – because, for the first time in as long as I can remember, the answer is: quite a lot. And not just behind closed doors in Westminster, but visibly, loudly, in ways that are cutting through to the public in a manner our industry has never quite managed before.
Part of this is down to prominent figures who have earned a following well beyond the trade press. When Tom Kerridge – about as close to a household name as our industry produces – tells LBC his pubs face a 100% rise in business rates and that many hospitality businesses are now operating at “about 110% costs”, that penetrates in a way trade press coverage simply does not.
When Gary Usher, who lost two of his restaurants last year, warns that high streets will be left choosing “between Wetherspoons and TGI Friday because they are the only businesses that can sustain this”, people outside our world hear it.
When operators across the country stuck No Labour MPs signs on their doors after the Autumn Budget, the nationals picked it up. When UK Hospitality’s #TAXEDOUT campaign invited every bartender, waiter and kitchen porter to write directly to their MP about the tax burden, and thousands did, that landed in Westminster with considerably more force than another trade body press release.
It would be easy to dismiss all of this as venting – justified anger with nowhere productive to go. I understand the cynicism. But I think we may actually be at a turning point, because the organising happening beneath the headlines is more serious and more coordinated than anything I have seen outside of the Covid emergency.
I was recently added to a WhatsApp group of hospitality operators in Norwich by my old friend (and occasional contributor to these pages) Mike Baxter of the legendary Gonzo’s Tea Room. Mike’s summary of the current moment is as good as any I have heard: “To be as busy as we are and then looking at the bottom line and wondering where the hell the money is???”
The group is setting up a formal Hospitality Commission with the backing of its local MP, Clive Lewis - a model the NTIA is replicating in cities across the country, giving the sector a structured seat at the table in local government. The Music Venue Trust, whose relentless advocacy secured a Fan-Led Review of Live and Electronic Music with a 50-point parliamentary charter, is now pushing the government toward a statutory Grassroots Levy – with a 30 June deadline to prove the voluntary mechanism works.
Instagram pages such as Hospitality Together are doing sharp, accessible work making the case to a wider audience. And the Heart of London Business Alliance has developed what I think is the most compelling policy proposal to come out of our sector in years: the Hybrid Business Rate, a 2% levy on online sales that would fund a 37% cut to property-based business rates. Not “give us a break” but “make the system reflect the economy we actually live in”. The launch of the Real Rates Reform campaign was at the Institute of Directors on 14 July.
Delivering change
If I had to pick two areas where concerted pressure could deliver real, material change, they would be business rates and VAT. The case for rates reform is unanswerable – the current system was built for an economy where commerce happened in buildings, and it penalises precisely the labour-intensive, premises-dependent businesses that hold our high streets together. HOLBA’s hybrid model is one route; the broader principle that online and physical businesses should compete on a level fiscal playing field is one that even this government would struggle to argue against publicly.
On VAT, the numbers speak for themselves. Germany has just permanently cut its restaurant VAT to 7%. Spain, Italy and France charge 10%. Ireland is moved to 9% from July – a direct result of sustained campaigning and lobbying by the Irish hospitality sector and its representative bodies, and a lesson we would do well to take to heart. The UK charges 20% – the full whack, no reduced rate, no special treatment.
We proved during Covid that a temporary reduction was workable. UK Hospitality’s polling shows 79% of the public support a permanent cut. This is not radical stuff. It is a policy choice that most of Europe made years ago and that our government, inexplicably, continues to resist. Tom Kerridge’s recently launched VAT’s the Problem (vatstheproblem.co.uk), calling for 10% hospitality VAT, recently breached 250,000 signatures. If you haven’t signed it, invest a couple of minutes to add your voice.
None of this is going to happen on its own. But the campaigns exist, the policy work has been done, and for once the political ground may finally be shifting in our favour. Write to your MP through the UK Hospitality or NTIA portals. Back the HOLBA rates proposal. Join or start a local hospitality alliance. Follow what Hospitality Together and Vat’s the Problem are doing on social media and amplify it. The industry has spent too long accepting its lot with a resigned shrug. That appears, at last, to be changing. Let’s make sure it does.