There is no doubt that London’s hospitality, tourism and leisure offering is a truly global attraction. It’s such a boon to the economy, local jobs, the high street and our position on the world stage – we can’t take it for granted.
But a storm is coming for the catering establishments that form the basis of our beloved capital. The tax burden on the hospitality industry has continued to grow exponentially and remains the highest in the economy. Changes to employers’ national insurance contributions have caused labor costs to soar, energy prices remain significantly higher than two or three years ago, and the cost of food and drink continues to rise.
Now, staggering business rates increases are in store for April, which could be the straw that breaks many camels’ backs.
Kate Nicholls OBE
UKHospitality
With the end of business rates relief, huge increases in property values and a much lower business rates discount than expected for hospitality venues, pubs, hotels, restaurants and cafes, to name just a few, are facing an increase in business rates bills by thousands, or tens of thousands for some.
For the average hotel, business rates will increase by 115 percent over three years. That’s a total increase of more than £200,000. For our local pubs, rates will increase by 76 per cent – a total increase of more than £12,000.
Compared to five other major cities in England, hospitality businesses in the capital have seen their rateable values rise the most, up 63 per cent.
A trail of broken promises
London is already the most expensive place in the country to do business – these cost increases make it even more difficult.
This is the opposite of what the government promised. In the Labor Party’s manifesto, it promised to create a level playing field between the big shopping streets and the online giants.
Instead, local pubs, neighborhood restaurants and independent hotels are worse off than distribution warehouses, large supermarkets and office buildings.
The playing field has not been leveled. Instead, the gap has continued to grow disproportionately.
This problem needs to be solved, and quickly. It’s less than two months before companies will have to pay these higher rates, and they tell me this is simply unsustainable.
Preserve our hospitality
The standard
But what about our hotels, our restaurants, our bars and our cafes?
The government’s commitment was to reform the system for the benefit of the entire high street. This is a catering-wide problem that needs a catering-wide solution.
The answer is simple: increase the business rates discount from the current offer of 5p in the pound to 20p. That is the maximum allowed in the law – legislation that the government itself has implemented.
By introducing that maximum discount, you show the sector that you are serious about solving this problem and that you actually want to create a level playing field for the shopping streets.
Help is needed for everyone, not just pubs
Companies in the catering industry and in the shopping streets all benefit from each other: it is a virtuous circle.
A family coming to London for a show will likely stay overnight and then treat themselves to a meal and perhaps a leisurely pint. The next day they get coffee and breakfast at the local café.
Excluding parts of the sector from support only risks reducing the overall hospitality offering we have here.
And this does not only apply to the catering industry; our sector is so important to the London economy as a whole. One in ten jobs in the capital are in hospitality, and the sector contributes more than £20 billion to London’s economy.
It is vital that we get this right and support the businesses that drive this growth, create local jobs and attract investment.
Because the soft power that a thriving hospitality, tourism and leisure sector gives to capital is so important – that’s why companies want to invest and establish themselves in London.
Companies want to be located in vibrant cities with a thriving hospitality sector. Just look at areas where hospitality is taking off, such as King’s Cross, Old Street and Farringdon.
Of course, work at local and mayoral level is also needed to achieve this, and there is positive collaboration on improving licensing and pedestrianising Oxford Street, to name but two.
But ultimately, hospitality businesses need a lower and more sustainable tax burden to realize their growth potential, create more jobs and revitalize our high streets.
This is currently starting with setting business rates across the sector. No part of the high street hospitality industry will be immune to these increases, and getting them right will be key to ensuring that job losses and business closures do not accelerate.
If we want to keep the hospitality heart of London beating strong, we need that sector-wide solution.
Kate Nicholls OBE is Chair of UKHospitality
#Kate #Nicholls #pubs #good #start