Hospitality industry faces 'widespread business failure' without energy bills support

The hospitality industry faces “widespread business failure” with tens of thousands of job losses unless the government steps in to tackle energy costs, UKHospitality has said.

The trade body has written to chancellor Nadhim Zahawi and business secretary Kwasi Kwarteng warning the sector faces a “crisis” due to soaring bills and a drop in customers’ disposable income.

The hospitality sector employs over 2.5m people and businesses are already reducing staff hours as trade has declined, the letter said.

The Caterer has been told some rural hotels are considering whether to shut completely during the cold winter months after seeing their energy contracts renewed at three or four times the original price.

UKHospitality chief executive Kate Nicholls wrote: “Our customers simply can’t afford to pay more as their disposable income is squeezed.”

“Immediate intervention in the commercial energy market is needed to avoid dire circumstances.”

Nicholls has urged ministers to introduce a “comprehensive support package” until the end of March 2023, when it could be reviewed ahead of the next financial year.

In her letter, she called for a business rates holiday for all hospitality businesses, with no caps applied; a deferral of all environmental levies; the reinstatement of the generous Time to Pay scheme from HMRC to free up cashflow.

Nicholls said hospitality venues were being forced to pay large deposits to energy suppliers and called on the government to reintroduce a trade credit insurance scheme for energy.

She also reinstated calls to reverse the increase in hospitality VAT from 12.5% to 20% which took place in April 2022.

Nicholls wrote: “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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