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NTIA Says Alcohol Duty Rise will push Night Time Economy Businesses Over The Edge

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Previous Government administrations, to which the new Prime Minister was a part of, would lead you to believe that they would leave no one behind, and that they are doing everything to support Small Medium Enterprise businesses and independents across the country.

If the New Prime Minister stays his course with regard to an increase in Alcohol duty and further tax increases in the coming budget, we will see thousands of jobs and businesses at risk, a huge proportion of these will be independent hospitality and night time economy businesses.

By imposing a double-digit duty increase to spirits and other categories, they will decimate already struggling independant clubs, pubs, bars and restaurants up and down the UK.

The projected impact of alcohol duty without a retail price increase will reduce the operating liquor margin by over 5%. With the culmination of trade being down by 15% (Average vs 2019) and costs over 30% up across the board, will place thousands of SMEs at risk.

Without the buying power of larger groups, and cost pressures not only from energy suppliers, but the indirect impact of cost inflation on drinks suppliers and other operational purchases.

We need the New PM & Chancellor to consider the impacts of no action, particularly in terms of business rates and VAT, as one operator highlighted to me earlier this week “Better to reduce VAT by 50% and have 10% of something than 20% of nothing!”

Michael Kill CEO NTIA Says:

“According to NTIA Member trading figures, we are starting to see the true impacts of cost inflation on our customer behaviour, with less disposable income, we are seeing businesses trading 15% down on average across the sector compared to 2019.”

“Costs are up over 30% and the projected impact of alcohol duty without a retail price increase will reduce the operating liquor margin by over 5%, pushing thousands of independent businesses into the red.”

“If the Government wants us to be part of the great resurgence and growth, they have to give us a stable platform to grow and the financial headroom to survive.”

“The current financial footing is untenable for many businesses, the energy relief subsidy is confusing and unworkable with many energy companies capitalizing on the scheme, and businesses still paying extortionate energy costs, with most independent businesses living hand to mouth.”

“We need the Government to extend business rates relief, restructure the energy subsidy as a clear cap on energy costs and cut VAT across the board, leaving no one behind.”

“The Golden quarter is rapidly approaching, and without further support in the coming budget, we will see thousands of Hospitality and Night Time Economy businesses and jobs lost in the coming months.”

Rob Star – Electric Star Pubs – London

“We have been hit from every angle over the last 12 months. The cost of the drinks we sell has been steadily increasing since the start of the year, with some suppliers increasing their prices multiple times – there is clearly a limit to how much of this can be passed to the consumer.”

“When we renewed our energy deals in June / July, we faced increases of over 200%, that figure doubled again in August. We are desperately trying to keep up with the constantly increasing London Living wage, although due to other cost pressures we are now tracking slightly behind.”

“The effect of these increases on our suppliers, leads to everyone else having to increase their prices from bar supplies to cleaners and security in a vicious inflationary circle. There was some light in a very dark tunnel with the freeze on duty, which would have kept yet another price increase at bay. The news a few days ago that has been scrapped, is a further kick in the teeth for an already battered and bruised industry.”

“How many more companies need to throw the towel in, before our government realizes they are pushing all of us over a very high cliff with nothing to break our fall.”

Zoe Andrews CFO Steel Yard – London

“The increasing cost of inflation in our industry is diminishing already tight profit margins. This is particularly apparent for stock where Brexit has already had a significant impact, and now, with the scrapping of the alcohol duty freeze, prices are set to rise even higher.”

“The issue here is that these costs cannot continually be passed on to the customer as high prices will simply make a night out untenable for the average person who is already suffering under the current cost of living crisis. We would urge the reconsideration of the duty freeze and further intervention to support the night time industry.”

Bruno Nunes CEO Creative HQ – Wales

“At the end of 2021, CHG had a 3yr growth plan that would bring about the doubling of our teams and the nearly tripling of our revenue showing a really strong bottom line conversion in the process and more importantly, introducing some really exciting circular economy projects. Since July, we’ve came to realize that we can no longer pursue our growth plans as intended and whilst we appreciate the international challenges, the instability from todays’ Govt is compounding the issue, both with the lack of clarity about the action that they will take but also from the challenges and impact that inflation, energy costs and consumer confidence is having on our balance sheets. Right now. We need action from Govt, not another GE or time wasted with party politics”

Michelle Armstrong Owner of Eden Group – Scotland

“The Eden Group, comprising 96 staff not including sub contractors, 4 units, will close without immediate action on soaring energy costs, V.A.T, alcohol duty and interest rates.

“Independent operators like ourselves have little to no chance in a market already dominated by multinationals monopolizing on these dark days, probably in the knowledge that they will survive the storm then reap a long-term control of pricing.

“With bills rising by up to 400%, the industry will be decimated without a pandemic-style response as the cost-of-living crisis is here and assistance is needed to protect business and jobs.

“We are already witnessing the scale of closure across Lanarkshire with Hamilton possibly being the worst hit so far. You can talk about half of the businesses but that’s also half of the jobs and people’s lives and livelihoods.”

“The situation is of course UK wide but as usual countries like Scotland and areas like Lanarkshire are hit harder and fall quicker. Footfall in most pubs and clubs are already down 50% since lockdown, so every possible cut back on operating costs have been made.”

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