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waitress serving customers in a restaurant | accountingweb | MPs back calls for hospitality VAT cut in parliamentary debate

MPs offer crumbs of hope for hospitality sector


Cross-party MPs have backed calls for urgent help for the hospitality sector, including VAT reductions and reform of business rates.

14th Feb 2024
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The desperate need for financial assistance within the hospitality sector was the subject of a debate in Parliament on 31 January, secured by MP for Stirling Alyn Smith. The sector is strangled by astronomical energy bills, business rates in dire need of reform, labour shortages post-Brexit and a sharp decline in takings due to the cost-of-living crisis and relentless train strikes. 

Although the increases in the national minimum wage (NMW) and the national living wage have been welcomed, the increased cost to hospitality businesses, often key employers of NMW workers, has not been cushioned by corresponding fiscal support. 

The suggestions were varied, but MPs across all the main parties were united in urging Nigel Huddleston, financial secretary to the Treasury, and the government to prioritise ensuring the survival of the sector in the Spring Budget plans.

As well as a meandering tour through the music venues, pubs, bars, restaurants, inns, hotels, cafes and other hospitality institutions of the constituencies represented in the debate, emphasis was put on the importance to the economy of the sector, both in terms of revenue and employment. 

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Replies (3)

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By FactChecker
14th Feb 2024 15:25

It would be interesting to know whether any of the MPs quoted (or even unquoted despite taking part in the debate) have any qualifications/experience in economics - or at least accounting?

Whatever the varied causes, the problem is as old as the hills ... a sector which no longer finds it easy to make a profit (higher costs not being met by at best static revenues) becomes cash starved and will increasingly seek short-term solutions.
One rather obvious result is that, as apparently speakers admitted, any direct alleviation of costs are extremely unlikely to be passed on to the customer ... and this actually bakes-in eventual failure (as per so-called 'zombie businesses' during the lockdown/CJRS days of Covid).

There comes a time when a business (and sometimes a whole sector) has to face up to the need for a new 'model' ... which may mean simply new products/services, or new market targets, or even wholesale reinvention.
It's a strange fact that the ability to identify that need and create a new business sector were things that were not uncommon (and relatively speedily implemented) in the first 1/2 of the 20th century ... but (despite the boom in IT) this was less apparent and much slower in the second half of that century; and the combination, of real innovation (not just 'improvement') with willingness to take risks, has virtually died out this century.

State subsidy (ignoring political sensitivities) CAN play a major part in growing an economy, but only makes sense where (a) it is aligned with a specific end-target of significance to all (affordable green energy for all, say); and (b) will take longer (and consume more capital) to achieve payback than private investors will tolerate.

So my question here: Why is this sector such a 'special case' when compared to sectors that might actually deliver a brighter future?

Thanks (7)
Replying to FactChecker:
By johnjenkins
15th Feb 2024 11:13

Unfortunately there was a decision to be made. Either loads of people die and business carries on, or lockdown and business suffers.
I certainly wouldn't like to make that decision although I guess doctors and surgeons have to make that decision every day.
Who decides where the money goes? Who decides which business will benefit more?
Our business modus operandi has changed yet Government still think that we will eventually go back to how it was. We have stagnation (Recession, but not a bad one like before, according to an expert) which will carry on until someone in power realises what needs to be done (oh yes that was Liz Truss and look what the people in power did to her).

Thanks (0)
By Mr J Andrews
15th Feb 2024 09:43

'' long as the savings are passed on to the customers.......''
I don't know which of the learned M.P.s came up with that one. But doesn't it take us back to square one ?
There's nothing clever in restaurant wine lists charging £70+ for a top shelf supermarket wine and £25 at the lower end for plonk. Perhaps encouraging B.Y.O.s with a marketable corkage would go a long way to getting punters through the door.

P.S. Is that a young Liz Truss waitressing in the picture ?

Thanks (1)