UK Hospitality urges government to provide energy support for sector
In a letter to the chancellor, UK Hospitality has proposed six measures that the government could implement to help hospitality businesses through increasing energy costs.
While many hospitality businesses are currently on fixed-price contracts, which protect them from price rises in the short-term, Allen Simpson, chief executive of UK Hospitality explained that this buffer “will fall away for many in the coming months”.
Prices in the wholesale energy market have been pushed up by the impact of the US-Iran conflict, with a knock-on effect in the UK.
The first of UK Hospitality’s proposals is intended to create energy market stability through a combination of measures.
These include caps on deposits demanded by energy suppliers, an obligation for these suppliers to offer new contracts to businesses and a restriction on what it calls “sector-specific profiling”, which has left hospitality businesses unable to get contracts in the past.
The trade association’s other five proposals included fiscal support for businesses coming out of contracts; relief on non-commodity charges; dropping levies on hospitality energy bills (such as the nuclear levy) which support other sectors; a Competition and Markets Authority investigation into the business energy market; and postponing costly new regulations, such as the Deposit Return Scheme.
In addition to these energy-specific suggestions, UK Hospitality also reiterated the need for the government to cut the sector’s overall cost burden.
It said that cutting VAT for hospitality to 10%, lowering business rates and stopping the holiday tax would be the most effective measures to achieve this goal.
In the letter, Simpson said: “Businesses within the hospitality sector are increasingly concerned about the impact of the crisis in the Middle East and how this will affect our already strained sector.
“We have been clear that hospitality is facing three consecutive challenges: the direct costs incurred from higher energy prices, higher costs passed through the supply chain and a customer base that cannot sustain raised prices.
“We are urging government to urgently pull together, in discussion with industry, targeted measures that support the hospitality sector. We hope that the situation will improve but government needs to be in a position to urgently help the sector – due to the fragility of the sector, even before the crisis, caused by substantial cost increases.
“Timely intervention can reduce the risk that viable businesses are lost, preventing lasting consequences for communities across the country.”
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