UKHospitality: A taxing issue

Contract caterers will no doubt be among the hospitality businesses that have sadly lost a total of 84,000 jobs since last October’s budget. That’s an outrageously high number of people who have been forced out of our sector, and unless the government begins to steer a different course for hospitality, the coming budget could prove disastrous for us.

It’s this scenario that recently prompted me to write to the prime minister, urging him to act if hospitality isn’t to be taxed out of its crucial role in leading the UK’s economic recovery. In my letter to the PM, I pointed out that the 2024 budget slammed on the brakes, stopping dead our sector’s ability to create jobs and support employment. The difference is stark: on average over the past decade, hospitality has created an additional 30,000 jobs between October and June – but from that horror budget to June this year, we lost those 84,000 jobs.

The chancellor’s budget this year must, then, include measures to reverse job losses, including fixing National Insurance Contributions (NICs) so that jobs are boosted by extending existing exemptions to young people and those moving from welfare to work. It was a socially regressive move to increase NICs and it has had a disproportionate effect on entry level jobs. Indeed, if the government fails to alter its course, our industry could see at least 150,000 fewer workers at a time when we should instead be bringing people into the jobs market.

Something else we’re calling for ahead of the next budget is a cut to VAT on hospitality, which would drive investment by bringing us into line with the majority of our rivals on the continent. And while it may not directly impact most contract caterers, lowering business rates via a 20p maximum discount for hospitality businesses as part of the promised business rates reform would go a long way to reviving our high streets, in turn benefiting sectors like contract catering.

These changes are crucial if our sector is to create jobs. Without them, the dire situation faced by thousands of hospitality businesses will get worse. Already, one in three have restricted opening hours, four in 10 have cut investment and six in 10 businesses have reduced staff hours. And consider the huge tax burden on hospitality – we pay more tax than any other sector, a whopping 71% of pre-tax profit.

To drive our message home to government, UKHospitality has launched our new #TaxedOut campaign (see News on page 6). Go to our website and you will find a toolkit enabling you to add your voice to the campaign, with three key actions that can be taken: write to your MP, print and display our poster in your venue(s) and promote the #TaxedOut campaign via social media. The more pressure we can exert on the government, the greater chance we have of effecting change.

I would also like to add a quick reminder that we’re continuing discussions with government concerning its proposed overhaul of the school meals system, as outlined in the recent spending review. Government funding for contract caterers delivering the likes of Free School Meals (FSM) has not risen as it should over the past 10 years, to keep pace with contract caterers’ key costs – food and labour –rising over the same period.

The spending review announced £410m per year investment by 2028 to 2029 to expand FSM in England to all pupils with a parent receiving Universal Credit. With contract caterers being largely responsible for providing FSM, we’re pressing the government to direct some of that £410m towards fairer funding for contract catering businesses.

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