The current way tax is applied to the sector inhibits growth and puts the businesses who obey the law and pay their employees well at a huge disadvantage.    The IHA would like to engage with Governement to hghlight the issues with the way VAT is levied and discuss how changes could stillumlate growth in the sector, generate more tax revenue and create valuable jobs.  By having a high tax burden on our sectors sales combined with inflationary pressues on our inputs it is putting many viable businesses in jeopardy.

Replace the current business rating system with a profit related tax.   Many hospitality businesses, particularly in city centres, are still paying excessively high rates (assessed bfore the pandemic) despite the decrease in footfall since the pandemic.   A business tax related to profits would be fairer and would automatically adjust if a situation arose, such as the pandemic.   Furthermore, such a tax would incentivise local authorities to support business growth as their revenues would increase.

The increasing amount of legislation being imposed on businesses is a serious burden on SMEs which, by their nature, have limited resources.   Consequently, many see the legislation burden as a serious negative against running a small business.    Rather that increasing the legislation burden, we would urge Government to consider alternative approaches that incentivise change.  For example, the scores on the doors scheme encourages businesses to improve their standards.   A similar scheme to promote healthier menus would be preferrable to taxing, particularly as taxes tend to be a blunt instrument in the longer term as consumers adjust to them as they do most price increases.

Hospitality can provide an important first rung on the employment ladder for young people. Entry-level jobs give teenagers practical experience of punctuality, teamwork, communication, responsibility and dealing with customers, while allowing them to earn their own money and develop confidence in the workplace. The article argues that rising employment costs are making it increasingly difficult for small hospitality businesses to provide these opportunities. 

Government should therefore reduce the cost and risk of employing young people. Ministers should review the cumulative impact of wage costs, employer taxation and employment regulation on businesses employing 16–18-year-olds, with the aim of creating a clear financial incentive for small employers to offer young people their first job. Any changes should balance this objective with maintaining employment protections for young workers. The article specifically calls for a lower tax burden and greater consideration of the legislative costs faced by hospitality businesses. 

Youth employment programmes should be redesigned around the realities of small businesses. The article argues that schemes requiring employers to provide around 25 hours of work or undertake significant administration can be difficult for independent hospitality businesses, where staffing requirements fluctuate with demand. Government could therefore develop a simplified small-business route into youth employment programmes, allowing shorter and more flexible hours, substantially reducing paperwork and making support straightforward for employers to access. 

Employment support should follow the young person into a real job rather than primarily funding administrative schemes. A portion of youth-employment funding could be directed towards practical incentives for SMEs that recruit, train and retain young people—for example, time-limited employment or training support targeted at genuine additional opportunities. The objective would be to make taking on an inexperienced young worker financially viable while rewarding businesses that provide meaningful workplace development. This develops the article’s argument that funding should support employment more directly. 

Hospitality should be recognised as a strategic partner in preventing young people from becoming NEET. Government should work directly with independent hospitality businesses and sector representatives when designing youth-employment policy, rather than designing programmes primarily around the capacity of large employers. The aim should be a simple proposition: remove unnecessary barriers to giving a young person their first job, make it worthwhile for SMEs to invest time in training them, and enable thousands of hospitality businesses to become an accessible route from education into working life.