Rising Costs and Calls for Relief in UK Hospitality Sector
Hotels and other hospitality businesses in some of the most scenic areas of Britain are facing a crisis. With the cost of fuel oil and bottled gas surging, many are pleading with ministers to cut taxes and green levies to avoid bankruptcy. The situation has become so dire that some business owners are questioning whether their establishments can survive.
Industry Leaders Demand Action
UK Hospitality, a trade body representing the sector, has written to Chancellor Rachel Reeves, calling for a halving of VAT rates affecting the industry to 10 per cent. They also want the planned tourist tax on visitors to be scrapped. This move is seen as essential to revive the battered sector, which is struggling under the weight of rising costs.
Business owners in remote locations are also urging ministers to remove green levies on fossil fuels. These levies have significantly increased their energy bills, making it even harder for them to stay afloat.
A Personal Struggle
Charles Bowman, a hotelier who runs a Grade II-listed premises in the Forest of Bowland, Lancashire, has spoken out about the impact of rising costs. He told The Mail on Sunday that the extra expenses could mean the difference between survival and not for some businesses.
“The Government could help us with these price rises, rather than benefiting through extra VAT. They should also take the [green] levies off,” he said.
Bowman and his wife Louise, who employ 98 people at the 25-bedroom Inn At Whitewell, describe the costs as a “stranglehold.” They have had to absorb many of the extra taxes to avoid raising room rates and meal prices, hoping to keep attracting customers.
The building has also been refused permission to install solar panels. It’s located in a valley unsuitable for a wind turbine, and there’s no electricity connection powerful enough for heat pumps. As a result, the hotel relies entirely on oil and gas for power.
Escalating Fuel Prices
The Iran war has sent heating oil prices skyrocketing from 65p a litre in January to as much as £1.30 a litre in early March, before falling back to about 90p. Bowman noted that LPG costs have also risen sharply since the beginning of the year, even before the conflict began.
Data shows that refill charges for 47kg industrial-size butane canisters rose from about £95 to £126 between December and March, a 26 per cent increase. Although prices have since fallen back to below £100 this month, the impact remains significant.
Rural Businesses Hit Hard
Margaret Major, managing editor of the Fuel Oil News trade publication, highlighted that while only 7 per cent of UK businesses use bottled gas, this figure rises to 17 per cent in rural counties. This means firms in remote areas are much more exposed to the price increases.
“It will be the rural small and medium businesses which are hardest hit by these price increases,” she added. As supply costs have mushroomed, so too has the Government’s 20 per cent VAT take for both fuel types, which is passed on to customers.
The climate change levy is also added to the cost of each litre of LPG, while fuel duty must be paid on heating oil.
Voices from the Industry
Sarah Chapman-Hughes, who runs the 11-bedroom Mortal Man hotel at Troutbeck in the Lake District, is making “zero” profit and has called for green taxes on her LPG bills to be scrapped. She branded the climate change levy a “joke.”
“Can anyone in Government say they care about the climate? Probably not, otherwise they would have got on with developing different sources of power,” she said.
Chapman-Hughes expects LPG costs to soar to £3,500 a month from the autumn, adding, “We don’t have a choice because of where we are located.”
Gary Shorrock, who runs The Old Post Office tearoom in Troutbeck with his wife Jane, said rural hospitality businesses were being “unfairly targeted” simply because of where they were based.
“We use fuel oil, which averaged 65p a litre then went up to £1.31 when the war started before falling back. But the Government should have acted immediately to reduce VAT,” he said.
Calls for Support
Allen Simpson, chief executive of UK Hospitality, wrote to the Chancellor last week, stating that the sector was facing “extreme cost pressures and is fragile.” He called on Rachel Reeves to intervene and “reduce the risk that viable businesses are lost.”
The industry body has called for “targeted support,” including the VAT cut, extending business rate discounts given to pubs to the rest of the sector, and relief on “non-commodity” charges on energy bills.
A Treasury spokesman responded, saying: “We have the right economic plan – we’re reforming business rates to back hospitality, with a £4.3 billion support package to limit bill rises, alongside capping corporation tax at 25 per cent, cutting red tape and taking action on the cost of living to boost the sector.”
