Calls for govt help as hospitality ‘on brink of collapse’

Raissa de Haas, co-founder of Double Dutch, has backed calls to reduce the UK hospitality sector’s VAT to 10%, warning the industry is “on the brink of collapse”.

Operators and chefs in Manchester, such as night-time economy adviser for Greater Manchester Sacha Lord, have been campaigning to halve what the sector – encompassing bars, clubs and restaurants – pays down from 20 to 10%.

A number of MPs, led by Alyn Smith, MP for Stirling, also gathered in Westminster Hall on Wednesday (31 January) to push for more support for the hospitality sector.

During the Covid-19 pandemic, the VAT rate the sector paid was 12.5%. However, that amount was increased to 20% from March 2022.

De Haas would like to see it lowered further than what it was during the pandemic.

She said: “The series of high profile closures in January alone show worrying signs for the industry.

“Soaring energy costs, skills shortages, train strikes, supply chain issues and the cost-of-living crisis have all created the perfect storm of challenges, leaving the hospitality industry on the brink of collapse, not just in Manchester but across the country.

“The government must take action by lowering VAT to enable hospitality businesses to keep prices affordable, without the need to massively increase prices which only impacts consumers’ pockets too.

“A temporary reduction in VAT would only be a sticking plaster on the wider issue, alleviating some of the financial pressure on businesses, but as we saw through Covid, it’s not enough to achieve long-term stability.”

It’s no secret that the hospitality industry in the UK has been having a hard time of late. In 2023 Scotland lost a record number of bars and pubs (76), while Britain dipped below 100,000 licensed venues for the first time since 2003.

In fact, last year hospitality accounted for 12% of UK administrations.

Last year’s double-digit duty hike on spirits – frozen until 1 August 2024 – has also created an increasingly unsettling environment for businesses to operate in.

Government needs to step in now

De Haas labelled the tax-hike freeze from the autumn statement as a “holiday extension”. In addition, she wants the government to “go further and demand a reduction in business rates”.

“More support is also needed to help hospitality businesses with the recruitment and retaining of staff to create stability in the sector,” De Haas continued.

“The current landscape makes it difficult for employees to stay in the industry, and the number of closures only makes it less attractive for people to consider a career in this industry.

“If the government doesn’t step in now, there’ll be even more hospitality businesses closing which doesn’t just impact these operators, but the wider supply chain too.

“The hospitality sector is a vital part of the wider economy, providing entertainment and social spaces – something which is needed all year round, but no more so than in the doom and gloom of a cost-of-living crisis.”

De Haas founded Double Dutch with her twin sister, Joyce de Haas, in 2015. Hospitality accounts for 77% of their business.

The brand recently announced the return of its Female Bartending Scholarship, which provides opportunities for women to build careers in the drinks industry.