Rachel Reeves will be hearing from some of the largest hospitality groups in Britain this weekend about the potential devastation that could result from the tax increases implemented in the recent Budget. According to Sky News, executives from various pub, restaurant, and hotel chains are planning to sign a letter addressed to the chancellor, expressing their concerns about the impact of these tax hikes on the industry.
The letter, which is still in draft form, highlights the significant financial burden that the hospitality sector is facing due to the steep increases in employers’ national insurance bills and the rise in the national living wage. The signatories, including companies like Stonegate Group, Wagamama, Burger King, Hotel du Vin, and Tossed, are warning that these changes could cost the industry close to £3.5 billion annually and lead to widespread business closures and job losses.
The letter also raises concerns about the viability of public sector catering contracts for schools, hospitals, and prisons, which could be jeopardized by these tax increases. The signatories are calling on the chancellor to create a new employer NICs band of 5% for workers earning between £5,000 and £9,100 and to exempt employers from paying NICs for lower-band taxpayers who work fewer than 20 hours a week.
In addition to these specific demands, the letter emphasizes the need for early implementation of business rates reform and suggests reversing the temporary increase in VAT from 17.5% to 20%. The signatories argue that these changes would help alleviate the financial strain on businesses and prevent widespread closures and job losses in the hospitality sector.
Some of the potential signatories to the letter include Pizza Hut, Oakman Inns, Tortilla Mexican Grill, Fuller’s, Elior UK, and The Revel Collective. These companies, along with many others in the industry, are facing mounting cost pressures and are considering passing on some of these higher taxes to consumers through price increases.
The pessimism surrounding the Budget’s tax increases has taken many by surprise, including senior Labour figures, and has highlighted the challenges faced by businesses in the current economic climate. The chancellor’s comments about businesses needing to absorb these increases through efficiency gains or lower profits have sparked further concerns about the potential impact on consumers and the economy as a whole.
Overall, the hospitality industry is calling for urgent action to address the financial burden imposed by the recent tax increases and warning of the dire consequences that could result without intervention. The industry is hopeful that by engaging with the government and highlighting these concerns, they can work towards a solution that supports businesses, protects jobs, and safeguards the future of the sector.