The Buyer
Hospitality chiefs: Chancellor has now “thrown us to the wolves”

Hospitality chiefs: Chancellor has now “thrown us to the wolves”

Senior hospitality chiefs were in a fighting mood at this week’s Northern Restaurant and Bar show in Manchester on the back of last week’s much maligned Budget that might have seen a freeze in alcohol duty, but none of the much needed measures the sector was demanding in order to provide the urgent help so many operators are asking for. Despite the setbacks industry chiefs said the sector needs to stay strong and united so that it can take the fight into this year’s general election, reports Jonathan Caswell.

Jonathan Caswell
14th March 2024by Jonathan Caswell
posted in Insight,

The mood at this week’s Northern Restaurant and Bar show in Manchester might have been one of frustration and anxiety about the issues facing the sector, but also a common need to get on and do business.

There is no way to sugar coat the conditions that restaurant, pub and bar operators are now having to work under as the culmination of increased business, energy, dry good and labour costs are stretching many to the limit.

The much called for and needed help and support in last week’s Budget came and went as the Chancellor Jeremy Hunt refused to listen to industry-wide demands for a cut in VAT, instead using a freeze in alcohol duty to support his claims he is doing all he can to help “the great British pub”. With no mention of the 1000s of restaurants, bars and food and drinks suppliers that support them.

It was against this backdrop that close to 9,000 people from across the UK came together for the 2024 Northern Restaurant and Bar show at Manchester Central.

An event which also saw some of the sector’s most influential and important figures set out their united vision and a way forward for a sector seriously under pressure.

Leading the debate was Kate Nicholls OBE, chief executive of UK Hospitality, and Sacha Lord, the night time economy adviser for Greater Manchester, along with other key industry figures including Will Beckett, co-founder of Hawksmoor.

Kate Nicholls OBE, chief executive of UK Hospitality told NRB24 that the industry has to stay united and speak with one voice despite the frustrations of government support

Nicholls told the show that whichever political party raises their flag above Whitehall later in the year, the future for the industry remains “challenging”.

Despite the trade body’s long-term lobbying supported by industry leaders and a significant number of MPs, pleas for a reduction of VAT from 20% to 12.5% were ignored by Chancellor Jeremy Hunt in last week’s Budget.

A decision that rocked the hospitality sector and was described by Nicholls at the time as a “cut-and-paste Budget”.

“He had a chance to accelerate and unlock hospitality, but instead he has delivered a cut-and-paste Budget, maintaining the status quo which continues to act as a drag on recovery,” she said last week.

Before adding: “Government needs to take a different approach. It needs to bear down on the never-ending rising costs that are forcing businesses to shut their doors for good – taking away people’s livelihoods and robbing communities of a vital asset.”

But despite the sector’s anger and frustrations we also have to be practical, she stressed, and work with whatever government is in power in order to do the best it can for hospitality.

Speaking at this week’s show Nicholls told attendees: “We are politically neutral and have to be, but I think it’s going to be challenging under either [Conservatives or Labour], because there is no money to fund anything that the industry really needs.”

Which is why it is paramount the hospitality and drinks industries remain as strong as they can and work together with whoever is in power to, in Nicholls’ words, come up with solutions that “fundamentally change the business model because at the moment it just doesn’t work with what we’ve got”.

Radical change

Kate Nicholls said UK Hospitality is now working with both major political parties in the build up to the general election

The issues facing the hospitality sector have now become so severe that a radical new approach is needed.

Nicholls explained: “The problem is, the VAT cut at the level we were talking about is the same as two pence off income tax. If you are the Chancellor of whichever colour, what do you want to do to get the economy going? I think that is a big challenge, the fiscal headroom isn’t going to change.”

Nicholls said UKHospitality will do what it can to talk to Shadow Chancellor, Rachel Reeves and stay close to the shadow Treasury team in the build up to the general election whenever it is held later this year.

She said it was vital the hospitality remain united on the key issues that matter the most to the sector: “We still need to push and we need everyone behind it asking for the same thing and we really need a laser-like focus; we need one ask.”

She added: “The only thing I would say is the best government for us is one that has a large majority of whichever colour, because then you can focus on longer term strategic developments and that’s what the industry needs.”

Sacha Lord said he felt like the Chancellor had “turned his back” on the hospitality sector by not providing any direct support in last week’s budget other than alcohol duty freeze

Sacha Lord, the Night Time Economy Adviser for Greater Manchester, had earlier told The Buyer that he was concerned about hospitality’s immediate future in the wake of Chancellor Hunt’s refusal to ease their VAT tax burden.

“I’m not anti-government and I will work with anybody at all, but the whole industry were calling out for a VAT reduction. He could have bought so many votes while supporting the industry and he’s turned his back and feels like he has thrown us to the wolves. On Saturday [after the budget] he posted a picture of himself holding a pint in a pub celebrating that he’d frozen alcohol duty. Well we’re 20 times more expensive, alcohol duty wise than a pint in Germany, which is nonsense, so yeah it feels like he has thrown us to the wolves.”

He predicted more hospitality businesses would go to the wall before the general election.

“My money is on a November election and the amount of closures we are going to see between now and then is going to be phenomenal and it’s very, very worrying,” he said.