UK’s biggest business group calls for new strategy to help bolster ailing hospitality and tourism sector

Long term help must be given to ensure the survival of small hospitality and tourism businesses, according to a new report by the Federation of Small Businesses (FSB).

Research by FSB highlights the devastating impact of the pandemic on the UK’s tourism and hospitality sector and its supply chain and outlines what small firms, which make up the majority of the sector, need to get back on their feet.

Many will now be reeling after the Government’s final stage of reopening in England was set back earlier last week, leaving some businesses closed and without income for 15 months and thousands of others still not operating to full capacity.

The new report ‘A Menu for Recovery’ calls on Government to develop a new hospitality and tourism strategy, overseen by a minister, to focus on the underrepresented small businesses in the sector and help lay out future support plans.

The report asks the Government to help small firms in the sector employ and retain skilled staff, which many businesses are struggling to do against a backdrop of Brexit and the pandemic. Cutting Employer’s National Insurance Contributions would play an important role in enabling retention and recruitment. FSB also wants to see more young people encouraged into the sector by ensuring T Levels work for small businesses by extending incentive payments for employers in England to deliver industry placements beyond July 2022.

The business group has also called for urgent action to:

  • Extend the hospitality VAT rate reduction to 5% until March 2022 and 100% business rates relief throughout the full financial year for businesses in England. More than half (56%) of small hospitality businesses say further rates relief would support their high street.
  • Make the process easier for businesses that sell food and drink to apply to their local authority for a pavement licence, and maintain the right for pubs, cafes and restaurants to operate as a takeaway. FSB research shows 65 per cent of small hospitality and tourism businesses backed the relaxation of planning regulations, allowing them to do so.
  • Back restaurants, cafes and bars by reducing alcohol duty on beers, ciders and wines.

Levels of debt amongst businesses are rocketing, with three quarters (77%) of small firms in the sector taking on debt post-COVID. More support is needed to ensure they are able to manage it, as well as providing greater clarity around the Pay As You Grow scheme, ensuring all options covered by the scheme are available to all businesses with Bounce Back Loan debt. With the moratorium on evictions coming to an end in less than two weeks, Government needs to limit the amount of rent arrears that landlords can claim back to encourage mediation. The moratorium must also be extended.

Nicola Bailey, FSB Development Manager for Dorset, Hampshire and Isle of Wight, said: “With mass closures and restricted openings over the last 15 months, COVID-19 lockdowns have shown just how important our pubs, restaurants, hotels and thousands of businesses in the supply chain are to both the economy and our communities.

“The ever-rising cost of doing business was already weighing heavy on these firms, and the pandemic has only exacerbated it. This week’s decision to postpone relaxation will have dashed the hopes of thousands of small businesses that have been unable to operate at full capacity since the pandemic started. With a crucial summer season ahead, we need to make sure the beleaguered sector gets urgent help to ensure its survival.

“Our new report sets out some of the ways that Government at all levels can help futureproof our brilliant hospitality and tourism businesses in the long term. Despite being a vital sector for the economy, tourism and hospitality businesses do not get the attention they deserve. A new strategy tackling the huge number of challenges facing the sector would go some way to help.

“We need to ensure that the system is not stacked against them. If businesses want to build on opportunities as they adapt to new ways of working, like expanding their outdoor dining or continuing to operate as a takeaway, they shouldn’t have to jump through hoops to do so.

“The hospitality and tourism sector has been hit hard by the pandemic, with businesses across the UK suffering unprecedented and unpredictable disruption. Government now has the opportunity to rethink the importance of these businesses and how they are supported.”

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