Energy crisis: UKH forecasts 'widespread business failure'

National trade body UKHopsitality (UKH) has called on the government for urgent support if thousands of hospitality businesses are to avoid collapse this winter in the face of soaring energy prices. 

In a letter to chancellor Nadhim Zahawi and business secretary Kwasi Kwarteng, UKH chief executive Kate Nicholls writes: "Hospitality businesses are facing a crisis this winter, with soaring costs combined with a sharp drop in disposable incomes for our customers.

"Without support, the industry will see widespread business failure, leading to tens of thousands of job losses, persistent scarring to high streets and damaged social mobility."

With over 2.5 million people employed across the sector, including some of the most sensitive to price increases, hospitality businesses must continue to trade so that staff can continue paying their bills, explains Nicholls, but they face enormous energy increases at the same time as having to light and air condition venues, on top of heating, chilling and cooking food throughout service hours. 

"Support has rightly been committed to households, but more must be done to help businesses, partucularly SMEs, that are at risk of failure due to no fault of their own. Hospitality businesses had their resilience severely strained during the pandemic and are not able to weather the worsening storm they now face. Immediate intervention in the commercial energy market is essential to avoid dire consequences."

In her letter, Nicholls calls on the chancellor and business secretary to introduce 'a comprehensive package of measures to the end of March 2023', including a business rates holiday for all hospitality premises, with no caps applied; deferral of all environmental levies; the reinstatement of a generaous HMRC Time to Pay scheme; and the reintroduction of a trade credit insurance scheme for energy.

She also wants to see the April 2022 increase in the VAT rate for hospitality from 12.5% to 20% reversed to assist economic growth. 

The CEO writes: "This package of five measures will ensure the survival of businesses, the continuation of employment and the flow of wages, restraining inflation and leading to investment in our communities. 

"Hospitality is critical to the nation's recovery from Covid, but it needs support to get through this current crisis, and as quickly as possible."

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