The UK has lost billions of pounds in income from the pub, restaurant and nightclub industry in the post-pandemic period, according to a new report. The hospitality business contributed nearly £37 billion in gross domestic product (GDP) to the UK economy in 2019, but this had dropped to £24 billion by 2021.
The startling new figures have been published by the Night Time Industries Association, as record numbers of bars, restaurants, pubs and theatres close down. The number of people employed by the sector has also fallen from 425,000 people across 38,000 businesses in 2018, to 392,000 jobs and 34,000 businesses in 2021.
Sacha Lord, chair of the NTIA and the night time economy advisor to mayor Andy Burnham, said in a statement: “The Government has failed independent business operators and the cultural sector across the UK. The report produced by the NTIA shows how hard these sectors have been hit over the last few years, delivering a stark reality of the challenges faced by the industry.”
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The NTIA’s CEO Michael Kill added: “As we head further into a cost of living crisis, despite the bounce back in jobs and firm numbers, consumer spend, sector income, productivity and profitability, continue to struggle. The recent announcement of December GDP figures suggest we have technically narrowly missed the recession, but it is clear that thousands of businesses are suffering the economic and physical impacts of a recession.
“The report shows some small signs of recovery, but it is clear that the industry is some way behind the rest of the economy. It is now vitally important that the government take the proactive step to cut VAT in the March budget, for all businesses across the hospitality and night time economy sectors, allowing the sector the financial headroom to recover.”
It comes after new data showed that restaurant closures hit the highest numbers on record. The last quarter of 2022 alone saw 504 restaurants entering insolvency, according to audit, tax and advisory firm Mazars. 118 of those closures happened in December.
Speaking to the Manchester Evening News, Lord, co-founder of the Warehouse Project and Parklife, said that while the government is speaking to major hospitality businesses, independent operators, which make up a far more significant portion of the industry, are being ignored.
“The government has been engaging with hospitality, but the voices at the table are the CEOs of the big corporates,” he said. “I know they met with the CEO of Nandos and Burger King. How does that help? Though we see them on every single high street, they actually only make up 20% of the sector. The independents make up 80%.
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“It just highlights how much we need support. It’s not ‘just a pub’. It’s not ‘just a club’. It’s not ‘just a theatre’. We need to protect these places for future generations, because we need social activity for our own wellbeing. It is worrying.”
He went on: “As an industry, we know what needs to be done. We’re only asking for what’s in line with practically every other European country, and that’s a reduction in VAT. It’s about damage limitation. I know people who are trading, but they know that when their energy goes up in April, or the next rates bill lands, they’re done. They’ll close.”
During the pandemic, VAT was reduced to 12.5%, and Lord has long been calling for the government to reduce the rate once again. He is also calling for visa limitations for foreign workers to be eased, after many left the UK and the hospitality industry during the pandemic, and have not returned.
“[The government] has pulled the rug,” he said. “People say ‘well, it’s not an open cheque book’. We don’t want that, we want to trade. With reducing VAT, even if we got it down to 12.5% it would be a game changer. In the long term, 12.5% of something is far, far better than 20% of nothing.”
It comes in the wake of a host of Manchester and Greater Manchester hospitality businesses folding, recently including the likes of Cocktail Beer Ramen + Bun and Michelin Guide-listed District on Oldham Street, as well as student institution Font Bar. Yesterday, the historic Oldham Coliseum confirmed it would be closing its doors for good.
Meanwhile, energy companies are being accused of withholding government support for energy bills. Lord has called for an urgent enquiry after many businesses reported that promised relief has not been delivered.
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