‘New period of darkness’ for night time economy, warns Sacha Lord

Sacha Lord, the Night Time Economy Adviser for Greater Manchester, has warned of the financial pressures on the sector ahead of the Chancellor’s Spring statement next week.

He said the night time economy faces a ‘new period of darkness’ amid the cost of living crisis and expressed ‘overwhelming concern’ for the sector, which has been battling shortfalls attributed to pandemic lockdowns, and a weakened investment market in the sector post-pandemic.

“The current cost of inflation and economic instability has exacerbated the financial pressures on operators in the night time economy, the majority of whom are already devastated by two years of low trading and who are struggling to overcome Covid-related debt,” he said.

“We are seeing difficulties across the board, from supply chain logistics, price rises in produce and ingredients and surging energy costs, which will only increase over the coming months.

“We can say with certainty that these unavoidable pressures will have huge, business-defining impacts on our hospitality sector.”

The Spring statement will be announced by Chancellor Rishi Sunak on Wednesday 23 March.

Many of the sector’s leaders including UKHospitality and the Night Time Industries Association, have called for an extension to the current VAT reduction to aid beleaguered operators.

Hospitality firms currently benefit from a reduction to 12.5% of VAT on food, soft drinks, accommodation, theatre tickets and other items to ease pandemic pressures, however this rate will return to its previous rate of 20% at the start of April.

UKHospitality CEO Kate Nicholls said extending the existing VAT rate of 12.5% will help hospitality operators to “hold down their prices, secure jobs and will help keep a lid on inflation.”

She said: “After two extremely challenging years and, with the unfolding cost-of-living crisis, there is now a very strong case for the Government to use the next Budget to deliver the vital support that these surviving and indebted businesses need, to protect jobs and defend the current fragile recovery.

“Holding VAT at 12.5% will provide vital support for thousands of small, local, community businesses. It will protect jobs at a pivotal moment for the recovery.”

Lord added:  “I applaud the businesses and operators across the sector who are already trying to mitigate the impacts of the cost of living crisis.

“I have heard of many who are currently absorbing costs to avoid increasing prices for consumers, but this is not sustainable in the long term.

“Operators will take at least three years to recover from this pandemic and we need to move towards a position where businesses are afforded a period of stability in order to aid recovery and growth.

“The Chancellor’s spring statement is an opportunity to calm nerves in the sector and provide this confidence.”

Pre pandemic, the UK’s nightlife industry overall represented around 1.6% of GDP – or £36.4 billion, according to the Night Time Industries Association, but lost around 86,000 workers as the full impacts of the pandemic were felt.

The value of the UK pub market also declined -61.9% in 2020 alone, wiping £13.9bn off the sector’s value. The total UK eating out market was forecast to recover to only 70% of its 2019 market value by the end of 2021.