It is no secret that this has been an incredibly challenging time for hospitality but hopefully we are through the worst and we have to look to the future. Our industry is incredibly resilient, with resourceful operators who can adapt and overcome most things thrown at them but it is now the time for government to realise that we could be the solution to many of their issues if they create the correct conditions for us to grow.
The current NEET crisis is symptomatic of what is going wrong, increases in wages and employment legislation looked good to ministers on paper but those of us that know the realities of employing young people knew that it was going to have a negative effect on the employment prospects of young people. As a sector we have provided fantastic gateway jobs into the world of employment, giving young people work ethic, confidence and teaching them the benefit of earning their own money, but young people take more time and therefore money to train them. Aiming for parity on remuneration is starting to mean that most employers are opting build more mature teams as it is now starting to be more cost effective.
The Youth Guarantee scheme was rolled out to try and tackle this NEET crisis, £1 Billion was allocated to the scheme where government will pay the first 25 hours pay of a young person that has been out of work for 18 months. That again looks great on paper but most independent hospitality businesses wont have enough hours fto take part in the scheme, we don’t have the time to fill out the paper work as we are busy running our businesses rather than being in our offices. That means schemes such as this benefit the large national chains rather than the small independents. There wilp also be a large proportion of the money will be eaten up in administration costs.
Rather than schemes it would be better to create an environment where hospitality naturally want to employ young people, where we want to extend our hours rather than contract them and where we want to invest in our teams, our premises or in equipment. By reducing the level of tax that is applied to the sector it will give the industry the headroom to do just that. In the eyes of the Treasury Value Added Tax is simply added to the sale price and collected by the business but in reality it eats into our margins, especially when our input costs are elevated as they are currently. Combine this with high labour costs then it is a recipe for disaster and certainly prevents growth.
With the Republic of Ireland reducing their rate of VAT to 9% this summer, following many other European countries there is certainly a precedent. We know the economy is in a bad state, we also know there is a need for defence spending but without urgent action we are going to see our amazing hospitality sector contract further, jobs for young people to continue to reduce and more empty shops on our highstreet. I hope the Chancellor has heard the calls from the sector this summer, this budget is a huge opportunity to turn things round and we cannot afford to get this wrong.