Manchester’s night time economy advisor Sacha Lord is calling on the chancellor to reduce VAT back to its pandemic discount rate of 5%, as inflation soars to a record 40 year high. He said that the hospitality sector is heading for ‘an absolute disaster’ unless the government acts quickly to counter soaring bills for bars, pubs, restaurants and hotels.
“My phone is off the hook at the moment. The overall feeling, certainly from the independents, is that at least during lockdown one, there was support there, furlough, business rates relief, bounceback loans, but no one expected this,” he told the Manchester Evening News. “Sadly, it’s the operators in more deprived areas who are going to be hit hardest. The backstreet boozers and the community pubs.
“In Greater Manchester, there are 1806 ‘wet-led’ pubs, so pubs that don’t serve food, and the vast majority are in our most deprived areas, and obviously if you’ve got the choice of buying a pint, or eating and heating, I don’t blame people for having to make that choice.”
Lord tweeted yesterday that an emergency budget is needed from the chancellor, and that hospitality was ‘facing another cliff edge’. One hotel and pub owner from Durham replied in the comments beneath: “I have witnessed a massive, and consistent drop in sales past month or so. The average pub was intended to accommodate the hard working class. The hard working class are really, really feeling the pinch in their pockets as inflation hits 9%. Going to the pub is now a real treat.”
Lord, who is behind the Warehouse Project and the Parklife festival, added that he’s heading to London in two weeks for meetings with hospitality trade bodies, with plans to lobby the government to drop VAT to either 12.5 percent, or even 5%, as it was during lockdown.
“There is no time to dither,” Lord added. “He has said that something might be coming in the autumn, but the chancellor needs to do something now. Some of the stuff he did during lockdown was fantastic, and I realise there’s not a blank cheque. But there’s things that he could do immediately like return VAT to 12.5, even 5%, and cut VAT on energy costs. A windfall tax on the energy suppliers seemed like a no brainer, but they voted against it.
“A restaurant in Manchester, a well known one, their electricity bill has just come through for £8000. You don’t have to be an accountant to realise that that’s not sustainable. We’re heading for a recession, I’m confident of that. And we’re reaching a very critical point. People are seeing their monthly wage not keeping up with inflation, so people will start to go out less, and choose where they go, and start to spend less. He’ll get nothing in PAYE The chancellor needs to act now.”
Lord’s comments come after the managing director of Pizza Hut Neil Manhas has said that the hospitality industry could be facing ‘double digit’ percentage increases across the whole supply chain. “As a global business, we can withstand the challenge ahead, however, small and independent businesses will struggle if support isn't provided today,” he said.
It also comes after the Bank of England governor Andrew Bailey warned that the UK is in for an ‘very big income shock’, due to the increase of global food prices.
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