Tax raid forcing pubs and restaurants to close one day a week

Telegraph

11 hours ago

Rachel Reeves's tax raid is forcing hospitality businesses to shut their doors at least once a week as they grapple with spiralling wage costs following last year's Budget.
On Wednesday, a new survey revealed that almost three quarters of hospitality businesses were operating at or below 85pc of their normal capacity, meaning they close for part of the week to save money.
The slimmer opening hours come as restaurants, pubs and cafes slash jobs in response to the rise in employers' National Insurance contributions (NICs) and an increase in the minimum wage, which came into force in April.
Despite strong summer trading, many hospitality businesses are reporting a strain on their finances following the sharp rise in labour costs.
The survey, carried out by a range of UK hospitality trade bodies, showed 73pc of companies said they had less than six months of cash reserves and one in five reported that they have no cash reserves at all.
It also found that 79pc of hospitality businesses had raised prices as a direct result of the tax raid in the autumn Budget, while more than half of companies said they had reduced staff numbers.
Andrew Griffith, the shadow business secretary, said: 'The Government stubbornly ignored clear warnings about the jobs tax and state-imposed wage rises from hospitality businesses because Reeves thought she knew better.
'Now, instead of a roaring summer trade, hospitality businesses can't afford the staff they need and are watching their cash reserves fade faster than a tan after a holiday.'
The trade bodies which conducted the survey – British Institute of Innkeeping, the British Beer & Pub Association, UKHospitality and Hospitality Ulster – have called on the Government to 'recognise the incredible pressure hospitality businesses have been put under, particularly since April'.
In a joint statement, they said, 'Unsustainable tax increases are squeezing businesses, stifling growth and investment, and threatening local employment, especially for young people.
'It is forcing businesses across the sector to make impossible decisions to cut jobs, put up prices, reduce opening hours and sadly limit the support they desperately want to give their communities,' they added.
The lobby groups urged the Government to reduce taxes levied on the industry, including scrapping April's changes to NICs, reducing VAT and cutting business rates.
They said the measures would help to drive growth for pubs, restaurants and hotels across the country.
The hospitality sector has come under significant pressure from the tax rises introduced in April. According to the trade body UKHospitality, the Chancellor's tax raid added £3.4bn in costs to hospitality businesses.
Around 84,000 jobs have been lost in the sector since last year's autumn Budget, as companies attempt to shed workers following the rise in labour costs.
Figures from the Recruitment and Employment Confederation showed that job openings in the hospitality sector – which includes pubs and restaurants – fell by over 22,000 in June compared to the same month a year earlier.
The concerns about a drop in hospitality jobs came as figures released by the Office for National Statistics last week showed that the number of vacancies in the UK declined to 718,000 in the three months to July, down from 44,000 from the previous three-month period.
Last month, the British Beer and Pub Association warned that one pub a day would shut across Britain this year as publicans battle surging costs, including Ms Reeves's £25bn National Insurance raid and an increase in the minimum wage.
A Government spokesman said: 'Pubs, cafes and restaurants are vital to local communities, that's why we're cutting the cost of licensing, helping more pubs, cafes and restaurants offer pavement drinks and al fresco dining, and extending business rates relief for these businesses – on top of cutting alcohol duty on draught pints and capping corporation tax.'