A joint industry survey has indicated that over a fifth of hospitality businesses will be forced to shut at least one site once cost increases come into effect this April.
The members survey included input from trade associations UKHospitality, the British Beer and Pub Association, British Institute of Innkeeping and Hospitality Ulster and revealed the cost pressures facing venues, compared to 2023.
The survey’s results are galling and the call to action is clear. They say a VAT reduction is necessary for survival.
Among the findings the survey showed that a quarter of hospitality businesses have no cash reserves and a further 29% have less than three months’ worth, 94% of respondents prioritised a lower rate of VAT, 80% backed a lower business rates multiplier for hospitality and business rates reform rounded out the top three priorities with 71% of support.
Speaking on the survey’s findings, Upper Bann MP Carla Lockhart said: “This is stark… in the past week I have had three local hospitality businesses reach out.
“They are at breaking point. The rise in National Insurance Contributions, the rise in living wage and business costs sky rocketing is causing great concern. Thank you Labour – another sector you have pushed to breaking point!
“I would reiterate my call on the UK Government to implement a bespoke package of support and our own Economy Minister to step up before our high streets are deserted by our family run businesses!”
Expressing the need for a VAT harmonisation motion at Assembly on February 11, Chief Executive at Hospitality Ulster Colin Neill, said: “Hospitality Ulster echoes the sentiment of the private members’ motion put forward by UUP MLAs and passed in the Assembly today that called for the harmonisation of hospitality VAT rates across the island of Ireland.
“As hospitality businesses in the Republic prepare to move to a 9% rate for food-based hospitality, their counterparts in Northern Ireland are forced to endure an unfair 20% rate that will make the sector less attractive and competitive in comparison.
“We cannot allow for a situation where a business in Donegal is at a competitive advantage to one in Derry/Londonderry. As noted in the motion, the hospitality sector supports around 77,500 jobs and generates turnover of £1.9 billion annually.
“Unless this VAT harmonisation is delivered, the damage done to the sector will have far-reaching effects across the Northern Ireland economy. Until such time, the NI Executive must step up and provide interim support to prevent the loss of the hospitality businesses that are the region’s tourism infrastructure.
“It is encouraging that the Minister for the Economy Dr Caoimhe Archibald supported the motion. The Minister must now join forces with Hospitality Ulster to take the argument to her counterparts in Westminster, who we are aware she is meeting this week.
“We trust that the Minister will use this opportunity to stress the special set of circumstances we face here, make the case to the UK Government that the playing field must be levelled, and seek a follow up meeting with the Chancellor working in partnership with Hospitality Ulster where VAT can be fully discussed.”
