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VAT cut critical for survival by three-quarters of small hospitality firms

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IN A STARK warning to the Treasury, a sweeping survey conducted by the National Caterers Association (NCASS) has unveiled that a staggering 75% of independent hospitality businesses view a reduction in VAT as essential for their survival amidst the severe inflationary pressures besieging the sector.

In Pembrokeshire we have already seen the closure of some well known local businesses including The Welsh Bakery, Madison’s Restaurant and many more.

The survey, which gathered insights from both members and the broader independent hospitality community, paints a grim picture of the challenges faced by small cafés, restaurants, bars, hotels, and street food vendors. With a clarion call for immediate action, the results underscore the urgent need for measures to protect the livelihoods of thousands operating within this critical industry.

Discontent is rife among the respondents, with 78% expressing dissatisfaction with the level of support provided by the government. A further 80% reported that the Autumn Budget’s measures failed to offer any relief, highlighting a disconnect between policy and the practical needs of these businesses.

Alarmingly, 37% of those surveyed indicated that their operations might not be sustainable over the next year, citing a dramatic 30% decrease in gross profit. The survey also revealed unanimous concern over rising costs, including staff wages, energy bills, and rent, forcing businesses to adopt drastic measures such as reducing staff hours, increasing prices, and accruing debt to stay afloat.

One member’s testimony encapsulates the despair within the sector, questioning the viability of continuing their business under the current conditions, especially in light of what they perceive as governmental negligence.

The crisis not only threatens the existing fabric of the UK’s independent hospitality scene but also stifles the growth of emerging businesses, many of which have been instrumental in revitalizing high streets across the nation. Despite the government’s promotion of hospitality-led regeneration initiatives, the current economic environment jeopardizes the emergence of future success stories akin to established brands like Meat Liquor, Pizza Pilgrims, and Bao.

The situation is dire, with an estimated 10 businesses closing daily within the hospitality sector. The NCASS reports a doubling in the closure rate among its members in 2023, with new startups hitting a standstill.

Amid calls for intervention, the plight of these small and micro businesses underscores a broader issue: the need for a conducive operating environment that nurtures community, supports families, and fosters economic growth. The increase in VAT and corporation tax, coupled with the cost-of-living crisis, has left many businesses operating on razor-thin margins, if any.

Highlighting the perverse incentive created by the current VAT threshold, which has not been reviewed since 2016, the NCASS argues for a recalibration to account for inflation and ease the burden on businesses teetering on the brink of viability.

The plea for a fairer VAT rate is a testament to the sector’s resilience and innovation, especially in the wake of the COVID-19 pandemic. With the treasury benefiting from increased tax receipts due to inflationary pressures, there’s a compelling case for leveraging this fiscal space to support the independent hospitality sector, thereby safeguarding high streets and the very essence of local communities.

As the industry stands at a crossroads, the consensus is clear: a reduction in VAT could be the lifeline needed for these businesses to weather the storm and contribute to the UK’s economic and social fabric. The government’s response, or lack thereof, could very well determine the fate of countless independent hospitality ventures teetering on the edge of survival.

Business

52 homes to be built in Roch as scheme gets final sign-off

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THE FINAL stage of approval for a near-£10m Pembrokeshire residential development of 52 homes has been given the go-ahead.

Back in April, members of Pembrokeshire County Council’s planning committee backed an application by Wakefield Pembrokeshire Ltd for the development, which includes four one-bed affordable housing units, on land near Pilgrims Way, Roch.

18 objections to the scheme were received, raising concerns including an “inadequate” affordable housing level, it being a high density development for a rural area, a loss of green space, the size of some of the homes, and pressures on existing services and facilities, and fears it may lead to an increase in second homes.

Nolton & Roch Community Land Trust (N&RCLT) has raised its concerns about a lack of affordable homes at the development, calling for a 20 per cent affordable homes element, as recommended by policy.

An officer report for members, recommending conditional approval, said: “It is apparent that the proposed development is not fully policy compliant, insofar as it cannot deliver the indicative 20 per cent affordable housing sought [by policy].

“However, a substantial positive social impact will arise through the provision of housing, including four one-bed affordable housing units, in meeting identified needs for both market and affordable housing.

“Financial obligations identified to mitigate adverse impacts arising from the proposed development cannot be met in full. However, [policy] acknowledges that in such circumstances contributions may be prioritised on the basis of the individual circumstances of each case.”

Speaking at the meeting, agent Gethin Beynon said the project had a “significant economic value” of around £10m, and the local applicant had “a sense of stewardship to the local community,” offering affordable housing and community infrastructure towards highways and education.

Approval was delegated to the council’s head of planning to approve the application, subject to the completion of a Section 106 planning obligation, making community financial contributions.

The Section 106 agreement was recently agreed, with the application now formally approved.

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Business

World of engineering and welding SPARCs interest in Ysgol Harri Tudur’s female learners

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AN EVENT hosted by Ledwood Engineering gave girls from Year 8 and 9 at Ysgol Harri Tudur first-hand experience of the world of engineering recently. 

Engineering is a booming sector in Pembrokeshire with a high demand for skilled workers in exciting career pathways associated with the development of low carbon and renewable energy industry and the Celtic Freeport. 

The young women heard from industry experts on the importance of engineering in Pembrokeshire, and had hands on experience using a welding simulator, at the company’s Pembroke Dock site. 

The learners are part of the County’s SPARC (Sustainable Power and Renewable Construction) initiative aimed as inspiring and empowering young females to consider careers in science, technology, engineering and mathematics (STEM) pathways where females are under-represented in the workforce. 

SPARC is funded through an alliance comprising Blue Gem Wind, Ledwood Engineering, Port of Milford Haven, RWE Renewables, Pembrokeshire County Council, Pembrokeshire College and the Swansea Bay City Deal. 

Mrs Laura Buckingham, SPARC practitioner at Ysgol Harri Tudur said: “Our learners had a fantastic experience at Ledwood Engineering.  They were given lots of advice by industry experts on the different career options and pathways within the engineering sector.  

“They appreciated the opportunity to ask their questions and found the session very informative. Having the chance to trial their welding skills on the simulator was an experience they continue to talk about and has definitely piqued their interest.”

Poppy Sawyer, Year 8 SPARC learner added:  ‘It was a really good trip. Talking to the different people there has helped me know more about the jobs we could get which will be very useful when making choices for my future.”  

 “They helped us a lot by giving us lots of information. We were able to look around and try welding. It was really fun,” added Tianna Marshall, Year 8 SPARC learner.

The Regional Learning and Skills Partnership also launched its Explore Engineering interactive website at the event.

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Pembrokeshire care home group hit by £150,000 budget blow

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A COMPANY with six care homes in Pembrokeshire has revealed it is facing a £150,000 financial hit due to controversial Budget measures.

The hikes in National Insurance contributions, combined with an increase in the Real Living Wage, are set to cause “12 months of instability,” according to Mike Davies, managing director of Sunset West Care Homes’ holding company, Dale Roads Group Ltd.

The group operates six care homes, including Langton Hall Residential Home in Fishguard, Pen-Coed Residential Home in Saundersfoot, and Woodfield Nursing Residential Home in Narberth. Other homes in the group are Woodland Lodge Residential Home in Tenby, Torestin Care Home in Tiers Cross near Haverfordwest, and Pembroke Haven in Pembroke Dock.

Mr Davies warned that struggling care homes may need to ask families to help cover the cost of care for their loved ones.

He is supporting a new campaign launched by Care Forum Wales (CFW), which calls for social care to receive an NHS-style exemption from National Insurance increases or emergency financial support to prevent care homes and domiciliary care providers from going bust.

Save Social Care campaign

CFW chair Mario Kreft MBE is leading the Save Social Care, Save the NHS campaign, highlighting the issue in letters to Welsh MPs, Senedd members, First Minister Eluned Morgan, and Health Minister Jeremy Miles. Similar letters have also been sent to Prime Minister Keir Starmer and Chancellor Rachel Reeves.

The campaign, supported by the Five Nations Group, warns that third-sector providers, including charities and hospices, face serious risks due to the Budget measures.

Mr Davies shared these concerns, stating that Sunset West Care Homes is looking at an additional bill of more than £130,000 just to cover National Insurance increases. Additionally, the group expects to incur an extra £18,000 annually to cover Statutory Sick Pay costs.

With 169 registered beds across the group, Mr Davies said further financial strain from wage increases could push care homes to the brink unless additional funding is provided by the Welsh and UK governments.

He said: “Operating during Covid stretched staff resources to their limits. Now, with these additional Budget costs, we are facing a snapshot of the challenges ahead.

“If costs remain as projected, we anticipate an extra £130,000 for National Insurance contributions alone. This doesn’t even account for the wage increases yet.”

“Uncharted territory”

Mr Davies warned that the social care sector in Pembrokeshire could face instability, with smaller operators struggling to survive.

He said: “We’ve already seen care home closures, and the likelihood is that smaller operators will find it even more difficult going forward. We are relying on additional funding to meet these new costs.

“Eighty per cent of our occupancy in the county comes from local authority placements. If there’s a shortfall, families might need to provide additional voluntary contributions.”

National funding crisis

CFW has calculated that the care sector in Wales faces a £150 million funding gap due to Budget measures, including a 1.2% rise in employer National Insurance contributions, a cut to the Secondary Threshold to £5,000, and a 5% increase in the Real Living Wage to £12.60.

Mario Kreft MBE said: “It represents a 37% increase in employer NIC for a member of staff earning £25,000 a year. This is effectively a tax on publicly funded care and on working people, which will ultimately impact families.”

Mr Davies echoed these concerns, adding: “We’ve discussed funding issues with local authorities, but they don’t have the money either. It’s going to have to come from the Welsh Government and Westminster.”

Pictured: Sunset West Care Homes group managing director Mike Davies says Budget measures will hit care homes hard (Pic: Sunset/Herald)

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