As the UK gears up for the 2024 general election, UKHospitality, a leading trade organisation, has outlined its key priorities. The election, necessitated by Prime Minister Rishi Sunak, must occur before 28 January 2025, marking the end of the current parliament's five-year term.
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Kate Nicholls, CEO of UKHospitality, emphasises the organisation's commitment to placing hospitality at the forefront of policy discussions with all political parties. Nicholls highlights the sector's struggles with continuous price increases over the last 18 months, underscoring the need for government intervention despite declining inflation. This intervention is crucial for enabling hospitality businesses to realise their full potential.
UKHospitality has made three critical requests to the Chancellor in the upcoming UK Budget aimed at supporting businesses and stimulating investment:
Cap on Business Rates Increases: They propose a 3% cap on business rates increases, arguing against the planned 6.7% hike for around 20,000 hospitality businesses. They believe the higher increase will lead to more business failures and divert funds from investment to rate payments.
Changes to Employer National Insurance Contributions: They suggest a temporary reduction in the lower rate of employer National Insurance Contributions (NICs) to 10% and raising the threshold for employer contributions. This would assist businesses in coping with the increase in the National Living Wage.
Lower VAT Rate for Hospitality, Leisure, and Tourism: They recommend a reduced VAT rate of 12.5% for these sectors. They argue that a lower VAT rate has been shown to boost demand, generate revenue, keep prices low, and stimulate growth in hospitality, with 70% of businesses passing the savings to customers.
UKHospitality emphasises that these measures are crucial for business survival and job protection and create conditions for rapid growth in the hospitality sector. They argue that these proposals would lower prices and drive immediate investment and growth.
The government's acknowledgement of these issues is evident, with Chancellor Jeremy Hunt set to present his tax and spending plans in the Spring Budget on 6 March 2024. Jonathan Reynolds, the Shadow Business Secretary, also indicated at last year's UKHospitality conference that a Labour government would consider reviewing business taxes that would encompass the hospitality sector.
Nicholls further elaborates on the vital role of the hospitality industry in the UK economy, contributing £93 billion, employing 3.5 million people, and generating £54 billion in tax revenues. Given its significant economic impact and growth potential, she asserts that supportive measures and investments are necessary to achieve the industry's aspirations.