FSB is urging policy makers to throw the retail and hospitality sector a lifeline to help them survive 2024.
The traditional post-Christmas lull is typically a time when hospitality and retail see a significant drop in trade as consumers cut back after the Xmas splurge. But in Greater Manchester this chilling effect has been magnified this year because of a consumer spending crash, and has already seen a number of casualties in the hospitality sector with well-known names such as Greens and Revolución de Cuba bar group, already announcing branch closures.
With an eye on the steep increase to the National Living Wage in April – when it rises by 10% to £11.44 – FSB has warned the next existential threat to high streets is just around the corner without additional help for businesses in the sector.
FSB Area Leader for GM, Anne Lambelin, said urgent action was needed to help small independents survive the bleakest New Year since the pandemic.
“Pubs, bars, restaurants and hotels are so often the cornerstones of our high streets, upping footfall for retail and providing jobs and a place to meet and socialise,” she said.
“Yet increasing rents and input costs, coupled with inflation, high energy prices and low consumer demand have been chipping away at the hospitality industry for the past few years, to the extent that more than half of small businesses in the sector are experiencing dramatically falling revenues, as well as rock bottom confidence levels.
“Employment costs have spiralled due to labour shortages, and there’s more pain to come in April with a big rise in the National Living Wage, and forthcoming changes to pensions legislation, and they’re all adding to the burden,” she said.
FSB research shows more than half of small hospitality businesses have come up against a significant increase in their running costs in 2023, and those who found themselves trapped in an unaffordable energy contract from when energy prices peaked have found it hardest.
She added: “Extending the 75% retail, hospitality and leisure business rates relief for another year in England, and freezing the small business multiplier were both welcome moves by the government in the Autumn Statement, but we need this relief pushed out for longer to give the hospitality some time and certainty to plan their way to recovery.
“And to improve confidence and spur economic recovery in the sector, we need policymakers to look at employment costs in the round and help small employers through things like uplifts in the Employment Allowance, as well as lifting the VAT threshold much higher than the current £85,000, which has been eroded by runaway inflation and spiralling input costs.”
The FSB warning comes fresh on the back of new data published this week by the Centre for Retail Research, which reveals almost 120,000 retail jobs were lost in the UK last year, and more than 10,000 shops shut their doors as businesses grappled with inflation and economic headwinds.
Robert Downes, FSB Development Manager for GM, said: “Councils are in the middle of Budget setting, and we’d urge them to look at what they can do to help. We have councils across Greater Manchester who have raised their parking charges in town centres over the past year, one by 250%. That’s astonishing when so many high street businesses are on the knife’s edge of survival.
“Councils are not allowed to ‘revenue raises’ from their car parking accounts, so putting up prices seems illogical, especially when squeezing motorists naturally affects footfall at town centres. It’s causing unnecessary suffering for businesses already in distress, and we need to see genuine blue-sky thinking on this subject to help these sectors. In Rochdale there is still the first three hours of parking for free which is a real help for their high streets.”
He added: “The message to the public for their high streets is simple: use it, or lose it.”