Letters: UK Hospitality says VATsEnough
[Re: Boris Johnson expected to reveal ‘national living wage’ hike, Wednesday]
Hospitality businesses are being battered by a perfect storm of labour shortages, disruption to supply and escalating food and utility costs. Margins are being squeezed as they try to rebuild.
Contrary to some perceptions, wages in hospitality have increased steadily, by approximately 20 per cent over the last five years, and have climbed further this summer. Businesses are committed to paying good, fair wages to their highly-valued staff, but with the huge debts in the sector following the pandemic, it simply isn’t possible for most venues to throw more money at the problem.
Higher wages without support to address the labour constraints will inevitably result in lower productivity as demand goes unmet, hospitality’s significant economic contribution will be suppressed and our recovery slowed down.
There are many levers Government can pull. Most effective would be a long-term VAT rate of 12.5 per cent. Under current plans, VAT returns to its pre-pandemic level of 20 per cent next April, meaning higher prices and an inflationary spiral which undermines real wage growth, hits demand and threatens business viability and jobs
A failure to act risks the future of hotels, cafés, pubs, restaurants and myriad other venues and attractions in communities across the country. Lower VAT will help hospitality return to what it does best – bringing life, light and heart back to our communities.
Kate Nicholls