Scottish hospitality sector warns of winter closures after Jeremy Hunt's Autumn Statement did 'nothing to help'

Hospitality businesses across Scotland may be forced to close over the winter due their inability to absorb sky-high energy bills, with trade groups condemning Chancellor Jeremy Hunt’s Autumn Statement for doing “nothing” to help give them a “fighting chance.”

With pubs, restaurants, and hotels facing steep utility costs, and rising wage and food bills, there is growing anger at Mr Hunt’s decision not to maintain the 20 per cent VAT rate, and to reverse the freeze on alcohol duty. Many in the hospitality sector argued that such decisions have imperilled an industry already struggling to cope.

In the run up to the Autumn Statement, a petition urging Mr Hunt to slash VAT by half had garnered more than 5,000 signatures. It argued that the current tax system was disproportional, and warned that unless change was implemented, there was a risk that a “large proportion” of businesses would go under

In the end, however, Mr Hunt did not budge. During his address to the Commons, he acknowledged that the VAT rate was already more than twice as high as the EU average, but said it would remain at 20 per cent until March 2016. Instead, he offered a sweetener by retaining employment allowance at £5,000 meaning employers can reduce their annual National Insurance liability.

For many businesses riding the economic storm, however, Mr Hunt did not go far enough. Some in the hospitality industry cautioned that, as a result, they were left in a downward spiral.

The Scottish Licensed Trade Association said Mr Hunt’s statement did “little” to instil confidence that brighter days are on the horizon, and warned that “the future is grim.”

Colin Wilkinson, the association’s managing director, said: “We already know from a recent survey that we conducted that some pubs and restaurants are considering closing over the winter period because they are unable to absorb recent sharp increases in energy bills at a time when they are recovering from the pandemic and still paying off debts incurred during Covid.

“We’re really concerned about the future of the industry. We need a lifeline - more needs to be done to help the struggling hospitality sector through the winter months.

Some businesses may be forced to shut down for the winter

“Businesses are already closing or reducing their opening hours - the chronic shortage of staff as a result of Brexit is contributing to that – but we predict further closures. We have previously called for business rates relief and a reduction in VAT for hospitality businesses – both would help in a small way.

“The reversal of the freeze on alcohol duty will also hit businesses and customers alike with the cost of a pint increasing by more than just inflation.”

Indeed, individual businesses attested to the growing pressures faced by the sector. Russell Imrie, managing director of Queensferry Hotels, which owns and operates the Best Western Plus Keavil House Hotel in Dunfermline, summed up the stark reality facing the industry.

“Hospitality businesses will decide that they have no option but to increase prices, which means they will be less busy, which means less tax to the government, and less paid hours for team members,” he tweeted.