Despite having the ability to trade, the current cost of operating is placing an insurmountable amount of pressure on businesses, leaving an entire sector in a very fragile state.
Over half of the night time economy businesses are seeing increased trading costs of over 30% (Compared to Pre Pandemic), with over 70% of businesses in the current climate either barely breaking even or losing money leading to an estimated one in four independent and culture businesses being lost in the next 6 months.
Businesses who would traditionally be profitable have been placed in an extremely difficult inflationary circle, where operating costs have been passed on by suppliers who are similarly trying to deal with onerous costs, but market constraints limit the ability to pass on these costs through price increases to our customers without a severe impact on trade.
independent businesses and the culture sector were impacted heavily throughout this crisis period. CGA AlixPartners research figures show a 13% contraction in independent businesses compared to only a 3% contraction in managed businesses.
NTIA Night Time Economy Report highlighted the following on Night Time Culture Economy:
- In 2018 approximately 425k UK jobs and 38k businesses in 2018. This fell to 392k jobs and 34k firms in 2021.Over the decade prior to
- the pandemic, the UK Night Time Culture Economy had shown a steady and sustained contribution to the UK’s gross domestic product (GDP), generating 1.64% or £36.9bn in 2019. However, this fell to £29.4bn in 2020 and to £24.1bn in 2021.
- Over 65% are unsure if they will survive the next 12 months without further Government support
- The Night Time Economy sector was also significantly affected in 2020, they recovered modestly in 2021. This was not the case for the NTCE. Here, consumer spending and share of GDP fell further.
- In 2018 the Gross Value Added (GVA) * of the UK Night Time Economy was £46.4bn and the GVA of the UK Night Time Culture Economy (NTCE) was £11.6bn. However, in 2021 GVA in the NTCE had fallen to £8.5bn, in the NTE to £34.5bn.
This is likely to be the result of forced closures and the slower recovery of Night Time Culture Economy businesses that rely on mass audience participation – nightclubs, live music, theatre, cinema and performance, all of which are the driving force of the night time culture offering.
These businesses face an immediate crisis, as we move further into a cost of living crisis and continue to face inflationary pressures which impact consumer spend, sector income, productivity, growth, investment and profitability. All of this suggests that the industry is operating on ever smaller margins and a large proportion of firms are in survival rather than thrive mode.
We are asking the Chancellor today to consider the following support for the upcoming budget:
Reduce VAT rate to 10% for the hospitality, late night economy & events sector for the next 12 months. (VAT Reduction must include alcohol / accommodation / food and tickets within the relief).
Lower the Business Rates Multiplier in recognition of the important role that NTE & Hospitality Businesses play within communities
Restructure the Energy Relief Scheme to deliver fair and reasonable energy rates to businesses across the sector, with consideration given to independent and cultural businesses.
Michael Kill CEO NTIA Says:
“Independent businesses make up over 70% of our industry and are so important to economic and cultural recovery. These businesses shape communities, generate social cohesion, visitor economy and have a huge part to play in shaping our world-renowned nightlife and cultural tapestry.”
“It is heartbreaking to hear of so many businesses being lost, and the potential to lose so many more. These businesses are owned and operated, and worked in by members of the community they serve.”
“The Government must recognise the importance of these independent businesses and culture in all its forms, and support them in the coming budget by lowering VAT, readdressing the business rates structure and reevaluating the energy relief scheme to ensure these businesses have the financial headroom to survive because when they are gone, they will never come back.”