Exclusive:Tommy Banks: 'there won't be a hospitality industry in a few years' without halt to tax rises
One of Yorkshire’s most acclaimed chefs has warned that “there won’t be a hospitality industry in a few years’ time” if tax rises continue to pile up, and urged the Government to cut VAT as part of its business rates climbdown.
Tommy Banks, who runs the Michelin-starred Black Swan in Oldstead and the Abbey Inn in Byland, told The Yorkshire Post that the current climate for pubs and restaurants is “the toughest it's ever been”.
“In many ways, it feels harder than Covid, because there was far more support in place then,” he explained.
Mr Banks was speaking in the midst of another Government U-turn, with Rachel Reeves expected to row back on changes to business rates for pubs.
Hospitality businesses had been facing the prospect of much higher rates after the Chancellor announced plans to end Covid-era discounts in her budget in November.
This was due to a reevaluation of the rateable value of properties, which Mr Banks explained would have seen the costs at the Black Swan effectively double.
UKHospitality has estimated that rates for pubs would have increased on average by 76 per cent, and a whopping 115 per cent for hotels.
This led to a furious reaction from the industry, which was already tackling rises in National Insurance and the minimum wage from the previous budget, with Ms Reeves being banned from her local in Pudsey.
“Inflation in food, drink and goods has already put a huge strain on the industry, while at the same time people have less money and are more cautious about spending,” Mr Banks said.
“On top of that, rises in National Insurance have added a massive burden, particularly for hospitality, which employs more people per turnover than most other industries.
“When you then add increased business rates, it feels like cost after cost after cost. We’re operating smarter and increasing turnover, but often that’s just to cover higher taxes.”
On Thursday, sources indicated that Ms Reeves was preparing a U-turn and would announce a package of support in the coming days, likely to include business rates relief and measures to cut licensing red tape.
The Chancellor is understood to have commissioned work on providing more support for pubs before Christmas, after the budget’s impact on individual sectors began to become clear in Government analysis.
She was also inundated with protests from backbench Labour MPs on both wings of the party, fearing for the future of their local.
The Treasury had put in place a £4.3bn fund to help pubs with the transition to higher rates, but it is understood more assistance will now be made available.
Mr Banks is calling for a cut in VAT for hospitality businesses, like much of Europe, which was put in place during Covid.
“If we carry on the way we’re going, there won’t be a hospitality industry in a few years’ time,” he said.
“The biggest change that could make an immediate difference would be reducing hospitality VAT to bring it closer to the rest of Europe.
“A short-term reduction, similar to Covid levels, would help many businesses survive and prevent closures that feel inevitable in the coming months.”