'A looming crisis': Hospitality warns chancellor ahead of Spring Statement

A coalition of industry trade bodies and associations representing over 100,000 businesses have written to the chancellor calling for a meeting to prevent “further economic decline and business closures”.

The letter is signed by more than 20 associations representing the UK’s night-time economy, cultural sector, and small-to-medium enterprises (SMEs) in hospitality, events, supply and entertainment.

It has called for a meeting with Rachel Reeves and warned the industry faces “severe challenges”, including unsustainable costs, falling consumer spending and a mounting tax burden.

The group wants to discuss possible relief measures for the sector, including an immediate reduction of hospitality VAT to 15% to allow “essential breathing space” for operators and a reversal of the National Insurance Contribution (NIC) increase due to come in from 1 April.

From next month additional cost increases of £30,000 to £100,000 per business are expected to push many “beyond breaking point”, the letter warns.

A recent industry survey found that 92% of nightlife businesses have already cut staff, operating hours or essential investments, while 40% warn they will close within six months without urgent support.

Michael Kill, chief executive of the Night Time Industries Association (NTIA), said: “The reduction of VAT to 15% for the hospitality, events and cultural sectors is not just a financial necessity; it is a critical measure to avert a looming crisis.

“We urge the chancellor to take action now to prevent widespread failure across the sector. The current tax burden places UK businesses at a severe disadvantage compared to their international counterparts, stifling growth and pushing many to the brink of collapse. Additionally, reversing the increase in National Insurance Contributions (NIC) is essential, as it disproportionately affects SMEs and businesses within the night-time economy, making it harder to retain staff and operate sustainably.

“Our industry is at breaking point. Spiralling costs – energy prices, rent, supplier costs, wage increases and pandemic debt repayments – are creating an unsustainable environment. Many businesses face additional cost hikes of up to £100,000 per year, risking devastating closures. Without urgent intervention, the UK risks losing vital cultural institutions and creative spaces. We implore the chancellor to act swiftly to avert this crisis.”

Reeves will set out the Spring Statement on Wednesday but has said there will be no further tax rises.