Industry criticises Government price cut campaign

By Shwetali Sapte

- Last updated on GMT

Hospitality industry criticises Government price cut campaign

Related tags: Inflation, Government

A Government campaign asking businesses to lower prices due to the cost of living crisis has been met with criticism from across the hospitality industry.

JD Wetherspoon chairman Tim Martin and UKHospitality chief executive Kate Nicholls are among those who have spoken out against the plan for a taxpayer-funded ad campaign asking businesses to cut prices from July, proposed by new cost of living tsar David Buttress.

Martin termed the plan as a 'classic example of tinkering, instigated by ministers who really don’t understand money'.

“The main economic critique of this government is that it doesn’t have an overarching plan, but just reacts to events, like a doctor who only treats symptoms, not the cause,” he said.

He added that eliminating tariffs on non-EU imports 'such as bananas, rice, coffee and children’s clothes and shoes' would 'immediately reduce shop prices and inflation'.

Nicholls spoke out against the plan as well, saying hospitality businesses were 'already highly price competitive' despite rising input costs.

“Energy costs are up 74%, goods 55% and labour up 54%, for example,” she said. “While government efforts to help consumers are always welcome, the reality is that just one in three hospitality businesses are now profitable.”

The British Retail Consortium (BRC), the Federation of Small Businesses (FSB), and the British Independent Retailers’ Association (BIRA) were among other organisations that have criticised the campaign.

Helen Dickinson, chief executive of the BRC, said businesses were already introducing measures to keep costs down, such as expanding value ranges, while the FSB said putting the onus on businesses to 'soak up additional costs just isn’t realistic'.

National chair of the FSB, Martin McTague, said most small firms were 'well beyond the point of being able to absorb extra costs without passing them on, which is often a last resort'.

“It’s a slap in the face for government to spend the extra tax it is raising from businesses on state-run marketing campaigns - doubtless focused on big businesses with corporate offers that can now be rebranded as helping the cost of living crisis, and so boost their sales,” he told the BBC​.

“Asking this group to soak up additional costs just isn’t realistic, especially when so many are worried about basic survival, and have already cut all expenses, even necessary ones, to the bone.”

McTague argued for the reduction of VAT rates to lift more small firms out of business rates, rather than 'just a marketing campaign using taxpayer resources to put government branding in shop windows'.

Related topics: Business & Legislation

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