Kate Nicholls OBE is Chair of UK Hospitality and one of the industry's most influential voices, with decades of experience spanning Whitbread, the European Parliament, and 14+ years leading hospitality trade organisations - most notably becoming the sector's fiercest advocate during COVID when she fought to keep millions of jobs alive and get the industry reopened.
Conor Sheridan is the founder and CEO of Nory, an AI-powered restaurant management system alongside being the co-founder of Mad Egg. Conor blends hands-on restaurant experience with a passion for tech-driven efficiency and profitability in hospitality.
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I have heard a lot of people saying they're just shutting up shop. They can't take anymore. And that's incredibly sad.
Welcome to a special episode of What's Cooking. I'm Connor Sheridan, CEO and founder of Nory, and today we're unpacking the UK budget 2025 and what it actually means for hospitality operators on the ground. The Chancellor just delivered a budget that gives our sector clarity on the future but no relief on the present. Let me walk you through the numbers. The national living wage is rising 4.1% 1271 from April 26th.
Workers aged 18 to 20 will see an 8.5% increase. 16 to 17 year olds and apprentices are up 6%. Business rates relief for retail, hospitality and leisure properties, which will all become permanent, sounds positive on paper. But here's the reality: the freezes on income tax and national insurance thresholds means for every pound of wage increases, it carries a higher effective rate and burden on labour. For a typical venue with 50 staff,
We're talking about thousands more pounds each year in annual labour costs hitting the PL from April. On top of that, there's no new supports for energy or food cost pressures. And the business rates relief, while welcome, still doesn't account for the different hospitality businesses that actually operate or their profitability levels. So what are we hearing? Operators are already making difficult decisions. Some are looking at price increases to offset wages.
Which risks dampening demand in an already cautious consumer environment, others are rethinking their staff mix, potentially hiring fewer younger workers despite a lower headline rate. Because the percentage increase is actually steeper for them as a group. Many are simply just tightening their belts wherever they can, cutting trading errors, reducing covers, or delaying investment into new stores. The uncomfortable truth, these costs will be passed straight through to the consumer.
Fueling higher inflation, putting even more pressure on the sector. To help me make sense of this, today I'm joined by Kate Nichols, OBE, Chair of UK Hospitality, one of the most influential voices in our industry. Kate has been fighting for fair treatment of hospitality at all levels of government, and she's not holding back on what this budget really means for operators trying to stay profitable. So let's get into it.
Kate, welcome to What's Cooking. Great to have you on the show.
Thank very much for having me, it's really pleasure to join you.
Awesome. Thanks so much. pretty timely time to have you on the podcast with the budget just having been announced this week. we'll get to the details in in a few moments, but I'm not sure you need an introduction. Most of the people listening or watching this show will know you super well as being the chair of UK hospitality and one of the biggest defenders and proponents for the industry. And but before we get into the details, I'd love for you to give short intro into how you became to be such a pivotal figure in our industry.
Thank you. And thank you for those kind words. So, yeah, I've always worked in hospitality. It was one of my first jobs, like so many people, first job, summer job, Saturday job, work in hospitality. And then when I graduated, I worked in the House Commons, the European Parliament and across Whitehall, dealing with a lot of food and employment policies, dealing with a lot of hospitality policies that were happening at a European level when we were all going into the single market.
And that got me interested in the political side, the legal side. And then I went and worked at Whitbread. At the time, Whitbread had pubs, brewing, hotels, coffee shops, restaurants, David Lloyd Leisure, all of those kinds of things. Gave me a really broad base on hospitality as a business. And I worked in the sort of business development side of that and government relations side. And then I worked...
as a consultant and an advisor to a number of organizations throughout the early 2000s, looking at legislation change. I brought together my two passions, hospitality and the people in hospitality, politics and trying to be a force for good and a change for good. And then over the last 14, 15 years, I've had the privilege of leading the organization.
originally one of the smaller organisations that looked after pubs and restaurants, casual dining. And then as we went through a merger with hotels and contract catering to lead UK hospitality, we merged that in 2018, provided a really strong single united voice for everything from a single site, independent restaurant, coffee shop, hotel, right the way through to the national chains.
And then probably found my voice during COVID when I was battling on the media and with the government to try and keep our industry alive, to save the jobs of millions of people who were vulnerable in the sector, and then to get the sector reopened again post-COVID. And since then, it's been a battle for survival.
Incredible experience. You've seen hospitality from every single angle, from policy to operator to working in in the spaces gives you a really unique perspective that very few in the world can have. Today you mentioned like it's been a battle for for survival, which is what we hear on the ground and day to day since twenty twenty. It almost feels like yesterday that we were talking about the April changes to the budget from last year's budget and now the budget season has come around again. I was landed with
A bit of disappointment, maybe to put that mildly from the hospitality industry. It'd be great to get your perspective on the current budget for next year and what wins you saw, if any, and where you s where you saw a fall down.
Well, I think you're right about that sort of economic challenge that we face. We're not over one crisis before we're hit with another in our sector. I kind of talk about going through the A to J of crises, know, austerity, Brexit, COVID, debt, energy, food price inflation, all of those kind of challenges that we've seen coming through the industry. And I'm always amazed that there's a lot of politicians when they say, why is hospitality struggling so much? And you say, well,
We were closed for the best part of two years during COVID and they'll sort of take a step back and go, really? Were you? Yes, we were. And that takes a long time to recover from. So I think the sector's got long economic COVID, which is why it's so challenging to try and get back on our feet. And many operators were still juggling the impact of those NIC changes in April from the last budget when they're reeling from those headwinds.
haven't managed to grapple with it. We see a third of businesses cutting their operating hours, two thirds cutting staff and headcount because they simply can't afford to be open. They can't afford to staff for the full time. quarter of businesses have no cash reserves, a third are operating at break even. Those are the stark realities that we put to the government. Effectively, the team at UK Hospitality, I don't lead it anymore, I'm chair, but
The team at hospitality has been doing a sterling job since the day the last budget dropped, almost the minute the chancellor sat down, trying to get a reality check on what that scale of that change on national insurance meant. I'm very hopeful that we would have got some better news this time round and despite having some warm words and proposed changes that could have delivered something meaningful.
The Chancellor seems to have reneged on those promises and that's why people are feeling very sore, very hurt and very badly let down because we were promised a region branch reform of business rates. We were promised a reset and a rebalancing so that the bills were lowered on hospitality and increased on online giants. And what we've got is a solution that does exactly the opposite.
We warned the Treasury that was because of revaluations and that was because of the unwinding of COVID. And either they didn't run the numbers and didn't believe what the outcome would be, or they didn't understand their policy and what they've done. But, you know, when property valuations go up, a small reduction in the multiplier is not enough to offset that, nor is it enough to offset the soaring costs of national minimum wage, national living wage, and national insurance contributions.
very frustrating budget for the sector as a whole. And to top it off, you've got a U-turn on tourism tax. Just a couple of months ago, the Treasury and the Tourism Minister were standing up in the House of Commons reiterating they would reform rates and lower the bills, reiterating that they did not intend to put forward a tourism tax. And yet here we are two days after the budget reeling from both.
It's very, very hard and I get the frustration and I get the anger out there. The anger needs to be directed at the chancellor and the politicians for the decisions they have made despite the evidence being presented by the team. I think the industry as a whole came together like never before.
delivered a single coherent message to the Chancellor, explained the situation and the dire nature that we were facing, and could not have done more to get the change we need. It's the Chancellor and ministers who failed to act.
Some really stark numbers that you pr presented there, a thirty percent, a break even, a quarter with no cash reserves, obviously like challenge after challenge, operators barely grappling with the r most recent NI increases and now to trying to model for next year, haven't even offset the last. Just feels like a compounding set of challenges. One thing that struck me the most was maybe they didn't understand the policy or didn't run the numbers to to the point where they got to the same outcome as the industry.
How do you think that we got here, given that it's such a big percentage of GDP and contributors to the economy that we don't have people that are close enough to the P and Ls of these businesses or or the reality on the ground that what these changes will make to to people's profitability?
I'm kind of at a loss to understand how we got here, but the Treasury paints in primary colors and big numbers. So they look at big picture. They don't tend to get down to the weeds of the granular detail of P &L. So yeah, often get people ask me that same question. Do they understand the P &L? And can I talk to them about EBITDA and PRAGA? They have no concept of
the dire situation and the very tight net profit margins that our businesses operate. They also have very little understanding of what it means to be a small business in our sector, trying to get those costs covered and having to cover those costs before you can open the door. But it's really the margins that I think they struggle with the most. There is an assumption that businesses that make a profit will be able to absorb costs and there won't be consequences. Business rates as a system is so antiquated.
so out of date and is fiendishly complicated. I can only assume they didn't work out the details and run the numbers on the rateable values. That's all I can assume because it's so far out from where they said they were going to end up wanting to be. And actually, if you look at the rest of the economy, when you do the same numbers for the rest of the economy, offices, supermarkets, retail, warehouses and distribution.
Their rateable values have all gone up by around five, six percent. It's kind of what you would expect for a three year period on property. As of up 30, 50, 100, I've heard of 500 percent increases. And that's just unsustainable. It's partly because of hours of done on turnover, not square footage. And we have long leases and upward only rent review. So our rental situations, our valuation situations are different.
I just don't think that was fully grasped and understood.
incredible when you think about it. it's obviously quite recent, only being a couple of days ago. What are you hearing on the ground thus far with your conversations with the industry, with leading figures? What's the feedback you're getting?
existential for a lot of people is what they're talking about, that they just don't know and understand how they can manage this. It's compounded by the fact, as you say, it's only two days on. The government hasn't yet published the regulations setting out how they proposed introduced transitional relief. So when big bill changes come, the government puts in place a system that gradually increases bills so it doesn't all hit on day one.
It will happen over three years. There is sector specific relief that will support those small businesses that are losing their current 40 % relief. There is a stepped change that caps the amount of extra bill you will have to pay. We don't know what those are yet. So small businesses in particular have just gone online, used the government's calculator. It gives them their rateable value change and then they can look at the multiplier. But we're missing that bit on transition and the support and the steps.
that needs to come. So we need the Chancellor to publish that as a matter of urgency and to look again. We need her to take another look at those multipliers. They are not enough of a discount to get hospitality through this. And if she doesn't want businesses to fail, jobs to be lost, the high street to be decimated, she needs to increase the level of that discount from 5p to 20p.
When big numbers come out as well, right? It's how can you plan your business if you don't have a timeline, you immediately see the headline and it's terrifying and then you don't understand what a transition looks like.
Absolutely, and it's frightening for many people and small businesses in particular having to make some difficult decisions. We've all got to look ahead as, the business a going concern? Can I afford to pay the VAT quarter? Can I afford to pay my rent? Can I afford to pay my people? And if you answer no to one of those, then the business is going to fail. So this is a real and pressing crisis. We need resolved.
It's bad enough that the budget was the last payday before Christmas and that going into Christmas we didn't know what our property costs were or our employment costs. We now know what they look like and they are very scary. The Chancellor needs to step in as an emergency measure. So we'll be asking politicians across the House to be asking emergency questions at the beginning of next week to try and get some emergency support for the sector.
And then but in the sector, certain businesses are are gonna have an outsized negative impact. We're already hearing from publicans and wet led businesses that they feel like the the change in alcohol duties will have an an outsized negative impact at a section of the industry that's probably closing at a faster rate than the rest.
Yeah, well, you've got tax upon tax, you know, for pubs, for wet led pubs and for hotels, their rateable values are based on turnover, not profit. So they're the ones that are disproportionately hit by business rates. You've then got alcohol duties, you've got tourism taxes and bed taxes, you've got an increase in employment and then the increase in employment taxes. So we need to make sure we've got systems in place to help guide these businesses through the challenges that they've got.
how to appeal their rateable value, how to make sure they're getting maximum discount and transitional relief on their business rates, how can they manage their stock so that they don't get hit with significant increases in alcohol or milkshakes. You've got milkshakes and soft drinks levies as well to contend with. So it's tax upon tax and it's death by a thousand taxes at the moment. And that's what the Chancellor needs to step in and stop.
Moving to some forward looking advice for for the industry first, then we can talk about maybe the fiscal policy afterwards. What advice would you give operators today, right? Tw 48 hours ago, they heard these news. What are what's practical or pragmatic advice of things they can do today to give them more certainty for for tomorrow?
Well, I think it's about looking ahead. So these changes come in in February on alcohol duties and April for the changes on business rates and property taxes and national living wage. So how can you future proof and plan that the sequencing of those costs that are hitting your business, how can you make some sensible and pragmatic decisions about where to take price because there's no way people can continue to absorb the impact of this and take the hit on margin.
So where can you push price? We saw last year some of the larger operators increased the cost of Guinness and some of the food items and were selective on their food items as they went through the Six Nations, for example, where customers are not going to notice price increases as much. How can you look ahead and put some price increases through before Christmas? After Christmas, where's the smart purchasing decision? I think there's also a role for technology.
to be able to make sure you're smarter at labour scheduling and planning on labour and on stock control to make sure that you are managing that as tightly as you possibly can to match costs with demand as much as possible and avoid unnecessary costs. And then it's about looking at wages, I think really importantly when you've got national minimum wage and national living wage going through.
How can you look at wages and labour scheduling more sensibly? Can you take advantage of any of those lower costs of labour that are coming through in differentials? So those are the three key areas that I would see.
Yeah, some really solid practical advice.
Yeah. and the final one on business rates, make sure you get your appeal in in time. You've got it. It's called check challenge appeal. So you register with the valuation office. You ask to check the basis on which your valuation has been done. Some of those will be wrong in previous valuation periods. 30 to 40 % of valuations were not correct for pubs and hospitality hotels because they are based on turnover. So there's some assumptions that are made.
So I would just get everybody to make sure you check the basis of it, make sure that there isn't anything that's wrong with your valuation, lodge an appeal if necessary. You can't do that until March and then make sure you get the maximum transitional relief.
That's great advice. We'll pin that in the show notes so people can follow those steps to get some immediate relief. Thank thank you for that. One thing you mentioned there at the very start was the consumer. And we were chatting before about some green shoots in the in the macroeconomic picture, about consumer savings you you talked to and potential higher consumer sentiment. Obviously the byproduct of tax on tax is higher price, which you alluded to there. And that's a bit of a dance that operators have to navigate.
it's inevitable. The price will have to increase. How do you think around those green shoots and then again price is going to have to increase in terms of like a picture for the economy going forward? It feels like one step forward, two steps back a little bit.
Yes, yes, I think I described it to a journalist earlier today, is that the sort of chancellor giving a nudge forward with one finger and then grabbing stuff back with two hands, which is sort of a similar kind of analogy to yours. Look, I think in terms of consumer sentiment, I'm going to start with the positives. We know that consumers want to come out. They want to socialize safely. They want to socialize with family and friends.
We've been tracking consumer sentiment about if you've got disposable income all the way through the cost of living crisis, we've done this. When you've got disposable income, what do you want to do with it? And the number one thing that they want, and it's now as high as 91%, when they've got disposable income is to come out and socialize with family and friends. And that's driven by special occasions, that's driven over the summer by weather and festivities. There has been a cooling effect on consumer sentiment and confidence.
You've seen fewer people out shopping in the run up to Black Friday's, Black Friday weekend, because of the negative sentiment that's coming out of the treasury. The budget was the last payday before Christmas. People were really fearful about what was going to happen, and it hasn't happened. There have been a lot of taxes. There will be a lot of price, and we'll come on to that. But the big things, the big scare tactics that the chancellor used were going to increase income tax.
We're going to do a big raid on higher earners. We're going to hit property. We're going to hit mortgages. All those things that were sort of talked about haven't come to pass at the budget. So I think you might see that customers who've held back from spending and starting to spend might well come out and splurge a little bit or feel that they've got more disposable income. More permission to spend is how I've described it. The second positive is that just simply because the worst hasn't happened.
the sky hasn't fallen in and therefore we would probably expect that they feel that they've got more money in their pocket because income taxes haven't risen. You will see inflation start to track downwards. It will be higher for longer because of what's happened on price, but it will start to track down and the mortgage rate will start to track down as well. And the second point allied to that is the chancellor marched everybody up a hill two years in a row. I have a huge black hole. I need to fill.
the economy is going to get worse, we are all going to get hit, and then it hasn't happened. I think consumers will switch off from that negative messaging. They've had it all the way through the summer and it hasn't materialized. So think there might be a bit of a breathing a sigh of relief and we may well have a good run up to Christmas and boy do we all need a really solid four weeks of trading now. The second bit is, which is positive, consumer savings ratio, household savings ratio.
is something that we measure and you can also measure discretionary spend, household discretionary spend and their confidence. And what you've seen post-COVID and post the election last year, you had a lot of green shoots of consumer confidence rising in June, July as we went through the election. And I think if you hadn't had a things can only get worse message, they would have gone out and spent, but it's gone flat. Household consumer savings ratio, the amount that people are saving higher than it was in COVID.
So they are stockpiling money. People think that the worst is gonna happen and they haven't felt they can go out and spend. So you have got quite a lot of savings that have built up, not with everybody by any stretch, but there is a buildup. And also real terms incomes grown. They've outpaced inflation for the last two years. You have big national living wage. You've had big public sector pay settlement. Let's not forget about 60 to 70 % of the working age population works in the public sector.
So they've had real terms wage increases. They've got disposable income. What they don't have is confidence to spend. If you look at the graph, does that. Consumer confidence is there, but their income is there, and that bit in the middle is the potential pie. So if people do feel that confidence is coming back, that they don't think they're going to get hit, we know they want to come and eat and drink out, and we know they've got some disposable income to do it. So there is a bit of rebuilding confidence that could come.
That may well be more positive for us. And hopefully if people haven't spent October, November in our golden quarter, maybe we'll get a bleed and a carry across into January and January sales and maybe into February. And then you start to look ahead. Easter is earlier this year. You will start to hopefully have some good weather. You've got some good sport again. So hopefully that consumer confidence will bleed through and feed through. And if you get successive cuts in interest rates, that will also help.
As you said, though, the challenge is every single time she puts a tax or a piece of regulation on the industry, it has an impact on price. And consumers are very price sensitive. We are at a tipping point now where people won't come out and spend as much or aren't coming out as frequently. We can see them come out for the big occasions, but it's not an additional spend. It's sort of not bleeding across.
So I think that is the real danger. that's the, as you say, the dance operators have to do. You've got 10 % price input, price inflation. I don't think you can pass more than 6 % through in price. So it's about finding those efficiencies and cost savings. And that's where operators are making those hard decisions about cutting shifts, cutting hours, looking at streamlining menus so that they're not having so many costs there. So it'd be a difficult balancing act.
but I don't think I'd be able to do it all on price. And every time you do do any movement on price, it has an impact on consumer spend.
Funny, isn't it? It used to be set up a business that can trade on two day parts, twelve hours a day, seven days a week. and that was like key to longevity. And now as you mentioned, people are really having to hone in on peak periods to maximize the turnover when they know they're going to be busy and effectively shut up shop and and take a minimized cost, a cost hit on on the off peak is just changes the dynamics of the industry completely and
It's really difficult and we are going through a very tough time where the business model and the finance model are under pressure like never before and you're not having to have the luxury of making the choices to what to do. You're making very difficult choices about people, about operating hours, about your quality of serve based on what's affordable. And also the final point on that is
The mental resilience and the toll that it's taking on operators who are in hospitality because they've got a passion for it and are working so hard to try and keep the business afloat, people employed, but the toll that takes on the mental resilience, I have heard a lot of people saying they're just shutting up shop, they can't take anymore. And that's incredibly sad.
A lot to do around public perception too, right? So having a conversation this week post budget to talk about the impact. people not in the industry can hear people who are say under twenty getting a a wage increase, that's a great thing. Like it should be in incentivize more people to go into the industry, minimum wage increases or living wages, that's a great thing too. Why is the industry so reluctant or or what is a push back on that and it can paint a negative perception of?
of the industry that it's like so cost focused and kind of profit mongers. Whereas we saw a really interesting example of a pizza brand in Curb this week selling all their slices for 71 P to show that's the margin that we get after you might sell something for ten pounds. And I just think there's such a divide between the perception versus what's actually happening of for operators.
And again, it's just gonna compound that, that people feel like, well, you should just be able to to consume all of this cost. It's a good thing, incentivise people, pass on the price. It's just seems like further and further the messaging is just driving a a differing in perception versus reality, which is not gonna help anybody.
Yeah, I think you're absolutely right. I take heart from the fact that over the course of this summer, collectively, we have worked to get that message out about how heavily we're taxed, how little money operators make from their products. And I often get asked on the media about, know, I can buy a steak down Sainsbury's for X and Y. Is it being sold at Y when somebody really do not understand or...
Why does it cost as much for soft drinks? And I think we do need to be better at explaining that and being able to get that across centrally and making that clear. think we started to do that. know, hospitality is the highest tax sector of the economy. 75 % of all of our profits go back in taxes to the government. And we do have just pence. And the government just doesn't understand margin and the narrow margins. They don't understand it for a small
restaurant, they also don't understand it for a Tesco. Tesco is also operating at 3-4 % net profit margins. It may have a profit, but still needs to do things with that profit. We all need to be able to make a profit to be able to reinvest. I think there is a danger, and you're right to highlight it, that this takes us back to some of the negatives that we're a low pay, low value, hardworking sector, people are on entry level jobs, and we resent paying them.
We have to explain that it's not to do with that. We want to employ people. We want to give them their first taste of job, know, like me. Loads of people have their first taste of work, working in hospitality. can give people who've got no experience, no qualifications, equip them with skills to life. And we can give them a really good career going from entry level to management in less than two years. But we have to have the headroom to be able to do that. We have to be able to make a profit, to be able to afford to employ people.
It's all very well talking about fair wages and living wages, but the business has to have a sustainable basis, a sustainable wage itself to be able to afford to do that. You only get fair wages if you can afford to be employed. And at the moment, we're just at risk of pricing these job opportunities out of the market, making it more risky, more costly to employ somebody. And we could, the frustrating thing for me is we could play such a big part in getting people off welfare into work.
part of the solution, the Chancellor and the government would just give us that chance.
Hundred percent. One part of the economy that signals confidence post budget was on the investor side. So if you looked at a reforecast for the year, the growth rate we think was pushed up to one point five percent, although the next three years are slightly down. Solid guilt price trending downwards. You mentioned about interest rates likely to be to be cut, inflation likely to come down. all of that was signalled towards
potential an increase in investment into the sector or opportunity. have you talked to anyone in in the space or any of the larger players who who are looking at a positive outlook over the next twenty four months around been able to deploy capital into the industry?
Yes, you're absolutely right. think investor confidence in the UK is returning. think it will be sequential. Investor confidence into the UK, into business. We will always be a beneficiary of that because you can get decent returns on property-based businesses. And we are a relatively mature market in hospitality. And one thing we do know in the UK is how to scale, how to take something from a single site.
to a bigger company. So there will be always investors that are coming back. And we know there's been a lot of cash floating around where people have been waiting to see what happens and waiting to see the outcome, not just of what happens in the UK, but geopolitics, know, wars in Ukraine, tariff policy with Trump, stabilization in the Middle East. So there has been a lot of uncertainty. What I am hearing, however, is that although the UK market as a whole and the economy as a whole looks better for investment,
Investors into the sector are still nervous about the fragility of hospitality margins and uncertainty around the government's employment rights bill and what that might do to employment within the sector. So I we're a little way to go before that investor sentiment returns to our sector. But it will come into the UK economy and that confidence about growth, we will undoubtedly be a beneficiary of growth. It's back to investor confidence breeds consumer confidence breeds
business confidence that we can go further forward. We need the government to look again and think again about the employment rights bill and make it more responsive to the needs of hospitality. That would go a long way because labor flexibility and cost of labor is a key thing that investors are looking at. They've got other places to put their money. We were talking before the podcast started about Ireland, your home country. If you are an investor looking at
investing in hospitality, operators in Europe don't have COVID debt because their governments gave them grants, not loans. If you're in Ireland or in Germany, you've got a lower rate of VAT and the government has particularly prioritized restaurants and eating out because it sees that sector as a growth sector for the economy. So if I was an investor, where would I put it at the moment? I'd probably put it into Ireland or Europe. I might put it into the US.
I'd want to put it into the UK, but we need to sort out our labour market first and our tax and fiscal situation.
No, it's a really good insight. I think I I obviously have restaurants in Ireland as an operator and feel the pressure like any other operators post pandemic, like changing maybe a change in sales mix to online, you've reduced margin due to co commissions from that side and you have like pretty rapid inflation increase. But we're operating in an environment where we have thirteen and a half percent that rate moving to nine percent, a corporate tax rate of twelve and a half to fifteen. you
here in in the UK it's twenty and twenty five, right? It's you couldn't have a harder you couldn't have a harder PL from both sides to manage. So moving on to the VAT, it felt a little bit like I know we discussed it previously that there was a few levers fiscally that we were hoping that were going to get pulled for the industry in this budget. One thing that worked quite successfully from an Irish perspective, having been involved in it myself, was a
really unified lobbying for nine percent and a message where there's effectively nothing else asked for other than this is the only thing that will help the industry survive and thrive going forwards. So there's no other option. So whether you're a publican, cafe, big chain, small family owned pizzeria, everybody asked for nine percent and everything was tuned to the PL. I know there is quite a solid amount of alignment locally here in the UK, but do you feel like that's the next step whereby it might just be
Look, this twenty percent is unsustainable and that has to be the lever that has to be pulled? Or what what fiscal levers do you think we should focus on over the next kind of twelve month cycle?
Yeah, I think you're right. VAT is the one if you're looking at having a quick injection of oxygen. I think we do need a reality check about how much that will cost. And everybody does point to Ireland, point to Germany. You've always had a lower rate of VAT for eating out, which is midway. So your reduction to nine is from 13. Same in Germany, it's from 13.
So I think to look at from 20 to 10 or 20 to match Ireland at seven, maybe too big a jump for the treasury to be able to afford at this point in time. We've got clear challenges still with the public finances. And that goes back to your investor point. Yes, that the markets responded really well to this budget because there weren't a lot of unfunded spending increases. I think VAT would be a big cost, not...
unmanageable, but a big cost. But we could look at different areas. Yours was a five percentage point drop. A five percentage point drop from 20 % would still be significant, still be a help. We can point to what happened in COVID. We can point to what happened with Gordon Brown post the financial crash. He did two and a half percentage points. Clearly we went from 20 to five during COVID. Huge amount of money that that cost the Treasury. But then it went up to 12 and a half.
So we've got the examples of where it was used and where it worked and how it worked. We just need to convince the government that that's what is needed. I think there is a perception point with the government at this point in time around, are we a priority sector to be supported because we will drive growth? And I don't think the government thinks that we will. I get lots of ministers saying you'll be a beneficiary of growth. We accept.
that you're big and you've got a lot of people who are employed, but are you the right place to put money to support it? And we just have to work on that perception piece and convince them that we are a safe bet. And for me, it's the quickest way you can get a return on investment for politicians and delivery. They can look at the eight priority sectors they've identified, which are all export earners, but they will take five to 10 years to give you a return on investment.
If you support it, we'll give you a return on investment on day three. Put some money into our pockets on day one. Day two, we will open longer and we'll get money across the counter. Day three, we'll create a job. So it is a very quick win and we just need to get that. We think we need unified voice, unified ask, clarity about the amount we're asking for and certainty about how it's going to be paid for. Those are the answers that we need to have for the treasury.
And while we get differences of opinion on the ask or the amount or how it's paid, that hinders us. And I think we need to be laser-like focused on getting that pulled together and delivered. my view, when I've talked to politicians of all political persuasions, politicians, think, are judged when it comes to elections on three things. Do I feel the place that I live, my high street,
is well invested, open, nice place to go, or are all the shops and restaurants closed? Can my kids get a job? A Saturday job, a summer job, a starter job. And then the third thing, do I have enough money left over in my pocket at the end of the week to go out and have a couple of pints, a fish and chips supper, maybe go for a family holiday? If the answer to all of those three things is yes, you're probably gonna get re-elected. If you support hospitality, you will deliver all three of those things.
To get that return ahead of elections and to turn around the fortunes of this government, I would suggest they need to back hospitality and a cut in VAT is the quickest way to deliver that.
Really nice. Couldn't have said it better myself. A final one for me would be for UK hospitality as an organization. You touched on that focus for for for government. how do you think about your next the next fiscal cycle and and where the organization will be focused? What what is the focus for you going forward, like going into an election cycle?
Well, I think we have got those elections coming up next year. So, you know, in Scotland, Wales, local council elections, we need to make hospitality and the plight of hospitality a key battleground in those elections to try and get some support coming through. They're happening in May. Scotland and Wales will be picking up particularly on a tourism tax. England is consulting on a tourism tax. I don't think a tourism tax works, helps, or is what the industry needs.
That will be a useful one. I think in the short term as well, it's about regulation. It's about making sure that you cut away the unnecessary costs of doing business. And we talked about Ireland and why did Ireland have the desire in the budget to cut VAT and support the industry. When I talk to operators who operate in UK and Ireland,
They say the Irish government is just pro-business top to bottom. Get away, get out of the costs of running the business. Make sure that you're getting out of the way of what business does best in terms of growth. We need that approach too in the UK on the employment rights bill, on packaging, on DRS, on all of those other unnecessary costs of doing business that we've got. We need a pro-business approach. Then it will be running into the budget.
first and immediately, we need to get the steps right to get this budget right. know, the thing that we learned from last year is you've got to push really hard in the finance bill. have probably a month before the legislation is finalized on this budget, we need to work in parliament to try and get better support going forward. And then as we go through into the next year, it's about those opportunities, those three key tests that I talked about and how
delivers the good result that you want and how VAT as a cut is where we need to see it happening.
Okay. Just want to say thank you for joining us on what's cooking today. Super insightful. Lots of really practical advice of what operators can do today. But I think hopefully the operators who listen to this will get lot of confidence from now that you and the team at UK hospitality are there fighting the corner of the industry. A lot of challenges ahead, but some green shoots too. So look look forward to seeing how you and the team execute over the next few months and and year. And thanks again for joining us.
Well, thank you. And look, we are a membership organization. We have lots of advice, guidance, support, insight, all of these kind of practical handholding steps on legislation, but also sustainability, employment, legal helplines. So people can have a look at our website. It gives you the details of membership. It's very low cost, but it will give you that support and that community to help get you through the next few tough months.
Thanks so much, Kate. Thank you.
Thank you.
That's it for this special budget episode of What's Cooking. Huge thanks to Kate Nickel, the chair of UK Hospitality, for joining us today. Kate had some great takes on how businesses and operators can shore up their PL next year post the impact of this year's budget. She also laid out some really practical steps on how to offset and challenge business rates that we're going to drop in the show notes. So make sure to check those out. And if you too got something from Kate's perspective, share it with a fellow operator. And if you're not following us already,
Now is the time. Until next time.
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