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UK Government faces fresh calls to reduce VAT

There have been fresh calls for UK Chancellor Rishi Sunak to reduce VAT to 12.5% to help businesses in the live entertainment and night time sectors.

Michael Kill, chief executive of the Night Time Industries Association (NTIA), has said that time is running out for the UK Government and the Chancellor to help with inflation and the cost of living crisis.

The NTIA carried out research with over 200 businesses within the night time economy, with 53.2% of respondents seeing a 30% increase in operating costs, compared to pre-pandemic levels.

Some 48% of respondents said they were barely breaking even, with a further 20.2% stating that they were losing money. Almost 45% of respondents said they were unsure if their business would survive the next 12 months, while a further 20.8% said they were not confident of surviving.

Those who have renewed gas and electricity contracts in the last four months have seen a 37% increase in energy costs. Clubs and venues that renewed electricity contracts saw up to a 54% increase, while gas contracts have increased up to 151%.

Roughly 37% of respondents said their weekly sales had dropped by 30% in comparison to pre-pandemic trade levels, while a further 15.5% have experienced up to a 50% loss in the same period.

On average, respondents were carrying £133,957 (€155,763/$160,303) worth of supplier and bank or loan debt, according to the NTIA’s research.

Kill said: “Time is running out for the Government and the Chancellor to put measures in place to stem the spiraling costs of living, with inflation reaching 9.1%.

“Hospitality, night time economy and events industries are facing a bleak summer, and uncertainty to what the future holds with no clear strategy presented by the Prime Minister on when or how this crisis will be averted.

“Businesses are struggling to meet operating costs, in many cases barely breaking even, with staff and customers starting to feel the impact of cost of living.

“We need decisive action from the Government, with the industry calling for an immediate reduction in VAT to 12.5% across the board, with an extension of business rates relief and an energy cap for small medium enterprise businesses.”

Sacha Lord, night time economy adviser for Greater Manchester, and chair of the board of directors of the NTIA, added: “The combined, unrelenting pressures of rising supply costs, energy increases and historic pandemic debt burdens are taking their toll on operators across the hospitality and events sector. Having barely recovered from the upheaval of the past two years, they find themselves once again in an uphill battle which, to many, will be simply unsustainable.

“I echo the NTIA and others in industry in calling on the government to implement a temporary reduction in VAT for the hospitality, late night economy and events sector, in order to save the livelihoods of the hundreds of thousands of staff across the UK that the sector employs.

“I continue to urge the Chancellor to show greater willingness and support the small and independent businesses across the UK who are the backbone of our economy.”

Image: Pien Muller on Unsplash