The government has pledged £3m to support Cumbria and Lancashire following the devastating effects of recent flooding to these areas. Of this funding £1m will be spent on a PR campaign to encourage families to holiday in the North of England over the Easter holidays. However, the British Hospitality Association and Cumbria County Council say this is insufficient given the cost of the damage amounts to £500m in these areas alone.
Both counties rely heavily on the hospitality and tourism trade, many of these businesses won't be open for the Easter holidays given the damage to their properties. These businesses will suffer further from loss of trade.
Coupled with this, the new National Living Wage will see many of these hospitality businesses paying an additional 50p per hour to all of their employees aged 25 or over from 1 April 2016. According to Big Hospitality, almost a quarter of workforces in hotels are currently paid less than the upcoming National Living Wage. On top of this increase, the cost of Employers National Insurance at 13.8% will also have to be met by these businesses.
Over the past few years, hospitality businesses have lobbied for a lower VAT rate to be applied to hotel and guest house providers - with recent and forthcoming events, it's needed more than ever. This would allow these businesses to reduce room prices, invest in their properties and employ more staff.
We are surrounded by other countries who all provide a lower VAT rate to accommodation providers - the logic is simple, attract visitors from outside the country and get them to spend their money here. Also, make it more attractive for residents to stay in the country rather than going on holiday abroad.
Given the recent flooding and other changes to the National Living Wage, perhaps it is time for the issue of a reduced VAT rate for hospitality businesses to come to the fore again. If the government is serious about supporting those businesses affected by the flooding then this should be on their agenda - it would be a real boost to the local economies directly affected by the flooding.
If you haven't made a claim for relief on your business rates or applied for a grant as result of being affected by the flooding then please follow the links below for furtehr information
