Sent to the Chancellor, Phillip Hammond, ahead of Tuesday’s Spring Statement, the missive calls for a “root and branch reform” of the business rates system as well as a dedicated Minister to represent the industry and to work on a plan for growth.
The letter asks that the current business rates systems needs be changed to provide a “level playing filed” that can “support high street businesses and incentivise investment.”
Its signatories include CDG CEO Steve Richards; Bills CEO Duncan Garrood; and K10 restaurants Chairman Ian Neill.
According to research published last week, one in three of the UK’s top 100 restaurant groups are not making a profit.
UK Hospitality chief executive Kate Nicholls says that “restaurants are reeling from a series of body blows which have combined to bring what was a dynamic, innovative sector to its knees.”
Nicholls believes April will see the biggest business rates increases in a decade warning that “without fundamental reform of the rates system we are likely to see more casualties and a brake on investment in communities, business growth and people.”
Business rates bills for restaurants across the country began hitting doormats last month but, according to real estate advisor Altus Group, 3,220 small restaurants, 3,888 medium sized restaurants and 782 large restaurants in England will all see tax rises for 2018/19 greater than last September’s 3% CPI rate.
“There has been huge growth in the casual dining market with restaurant numbers up 15% overall since 2010,” says Atlus president Alex Probyn. “The race for space has pushed up rents impacting on rateable values. Extra tax for business rates coupled with rising food prices and staff costs through increases in both the national and minimum wages are creating a potentially lethal cocktail as margins are squeezed.”
The letter to Phillip Hammond in full
Recent weeks have seen a disappointing flurry of restaurant venue closures as a result of the perfect storm of soaring business rates, rising employment costs and Brexit-fuelled inflation that is hitting the UK’s hospitality industry. Our outlets are the lifeblood of our high streets, towns and villages, and have long driven regeneration and employment in local communities. We have grown by almost 10% year-on-year and our businesses have accounted for 2% of all UK capital investment.
Hospitality is a key economic driver of UK plc, accounting for 10% of UK employment and 5% of GDP. We are double the size of financial services, have a turnover greater than fashion and creative industries combined and our tax contribution to the Exchequer is equivalent to the entire defence expenditure budget.
We need Government action now to reduce the unnecessary costs of doing business if we are to avoid damaging closures and job losses. Ahead of the Spring Statement, we ask the Chancellor to implement a root and branch reform of the business rates system. The system needs to level the playing field, support high street businesses and incentivise investment. At this critical time for the UK economy and in the run up to Brexit, hospitality must be a priority.
We are also calling for a dedicated Minister to represent our industry, to hear our voice and work with us on a plan for growth. The sector is at a tipping point and needs focused attention now.
Nick Varney, Chief Executive Officer, Merlin
Steve Richards, Chief Executive Officer, CDG
Duncan Garrood, Chief Executive Officer, Bills
Patrick Dardis, Chief Executive Officer, Young’s
Toby Smith, Chief Executive Officer, Novus Leisure
Peter Marks, Chief Executive Officer, The DelticGroup
Bob Ivell, Chairman, Mitchells & Butlers
Ian Neill, Chairman, K10 Restaurants
Peter Borg Neal, Chief Executive Officer, Oakman Inns& Restaurants
Alex Salussolia, Managing Director, Glendola Leisure
Paul Wigham, Chief Executive Officer, All Our Bars
Kevin Sammons, Managing Director, The Pub PeopleCompany Ltd
Sarah Weir, Managing Director, Albion & East Ltd
Ian Coll, Founder and Managing Director, MamuskaRestaurants Ltd
Suzanne Baker, Commercial Director, Stonegate Pub Company Ltd