Mon 19th Feb 2024 - Quarter of hospitality businesses have run out of money as VAT cut tops priority asks Quarter of hospitality businesses have run out of money as VAT cut tops priority asks: A joint survey by UKHospitality, the British Beer & Pub Association, the British Institute of Innkeeping and Hospitality Ulster shows that a quarter of hospitality businesses have no cash reserves and a further 29% have less than three months’ worth. The research, which surveyed hospitality businesses from 15 January to 1 February 2024, also found 98% have seen food and drink costs increase; 96% have seen wage costs increase; 98% are concerned about the national living wage rise in April; and 85% have seen their energy costs increase. The rising costs experienced by businesses have left almost two-thirds (64%) not optimistic about their business’ prospects for the next 12 months, an increase of 6% compared with October 2023. Respondents were clear about their priorities for government action at the forthcoming Budget, with 94% prioritising a lower rate of VAT. A lower business rates multiplier for hospitality (80%) and business rates reform (71%) rounded off the top three priorities. Reducing employer national insurance contributions (51%), further energy support (48%), capping the business rates increase in April (44%) and reducing the rate of alcohol duty (44%) were also popular among respondents. In a joint statement, the trade bodies said: “These results clearly show the perilous state our pubs, restaurants, hotels and cafes find themselves in. The fact that a quarter have run out of cash reserves is a real cause for concern. Those businesses are extremely vulnerable to the slightest shock forcing them to shut their doors for good. We’ve already seen too many good businesses shut up shop and that has left cities, towns and villages without a vital community asset. These businesses need urgent support. Hospitality is the foundation of the everyday economy and absolutely vital in the services they provide. Measures to help the sector won’t just keep businesses afloat, but it will inevitably lead to further investment from the sector, which has a proven track record of driving economic growth, creating jobs and creating fulfilling careers. It’s clear that practically no business has been immune to the relentless price increases that have plagued the sector and can absorb costs no longer, with many already forced to pass these on to customers. If the government wants to avoid further inflationary price rises for the public and further closures across hospitality, it needs to heed the message from our members to act now. Addressing the looming business rates increase, implementing a lower rate of VAT for hospitality and cutting duty would be good news for businesses, consumers and the economy. We urge the chancellor to act at his Budget next month.”