Thread by @TonyRoddUK

A thread on lost taxes & the risk of losing the hospitality industry to the economy:

Over the last three quarters there have been record closures of pubs & restaurants in the UK. Some statistics state around 2 pubs & 3 restaurants every day! You've probably seen 1 today!

Many factors have contributed to this from energy prices to Brexit and from the war in Ukraine to fuel costs. Whatever the cause, many within the industry feel the government could have done more to help and may, in fact, be behind the demise of the industry.

But what is the risk of losing such a big industry when we look at the health of the economy?

The government take a huge chunk of cash directly from us every day.

For every £1 spent in a restaurant, the government take around 16.7p in VAT. Obviously this can be offset against purchases, but as our main purchases in a restaurant are food and drink, there’s actually very little that we buy that we can offset with.

For a restaurant of our style, staff costs can run at around 45% of turnover.

Of that, around 17.5% is paid as PAYE and employers NI back to the government. That’s 7.9p of every £1 turnover.

Business rates work out at 2% of our annual turnover, so approximately 2p of every £1.

So of every £1 you spend at a restaurant, 26.6p goes straight back to the government. Remember that when you next question the price of a meal at your local eatery.

And remember that team of staff who have all been paid? The government take employee's national insurance from them as well, meaning wages are taxed from both parties, so the government has now made another 3p on the £1.

Close a restaurant and the government instantly lose this income, nearly 30p on the pound or for a restaurant of our size, around £390,000.

(I recognise every restaurant and pub is different of course)

Let’s also consider all the suppliers we work with:

We have butchers, fishmongers, greengrocers and other food suppliers. There are wine makers, brewers, distillers and drinks producers. Cleaning supplies, kitchen equipment and people to service and clean everything.

Laundrettes for our table cloths & tailors for chefs jackets & uniforms. Website providers, booking systems, marketing & PR , florists & printers. The delivery companies who get everything to us. Musicians &artists provide ambiance, & recruitment companies for staff.

The network of industries that support a restaurant or pub is huge. All of these companies pay taxes in the form of PAYE, National Insurance, Business Rates, VAT and Corporation Tax. If a restaurant closes, all of these businesses suffer and the knock on effect is massive.

Now many restaurants often spend around 45% on staff and 30% on stock, leaving them 25% of their turnover to pay their rent, business rates, energy bills, insurances, and other operating costs, so making a profit is really tricky, but let’s say they’re really successful and they

make a profit…the government take 25% of their profits in corporation tax! So on top of the 30% the government has already had taken, they’ll continue to take funds from businesses who have worked extremely hard to turn a profit.

Remember COVID? I’d rather forget it. But like many other businesses, I will be remembering it for years to come as we’re paying off our bounce back loan.

If the industry is allowed to fail, the government won’t be able to recover all those lost loans.

Now we’re all aware of unscrupulous businesses (many owned by partners of government ministers ) who took out these loans & had no intention of paying them back, but for hospitality businesses, we didn’t have a choice.

We were forced to close during lockdowns, &the only chance of survival was to take out these loans, & we’re all doing our best to pay them back.

The government paid out £80b in bounce back loans & you’d expect they might like some if this back. Not if we close!

The industry is also the 3rd largest employer in the UK, so on top of lost earnings in taxes, if the sector was allowed to fail, unemployment would rocket, meaning even more strain on the already stretched system. Pension contributions would also fall & we would be worse off.

So if the industry is allowed to fail there will be a loss of taxes, a loss of BB loan repayments & a huge increase in unemployment. Which raises the question: Why are the government not acting? Why are they unwilling to support the industry? Why turn their backs on us?

I have many theories on this matter, but that’s for another time. In the meantime, we should ask ourselves; how can we stop this happening? Support your local restaurants where you can.

Go for dinner, go for lunch, indulge in breakfast out. Order an extra glass of wine or simply treat yourself to the dessert you were considering leaving. Lobby your MP or sign our petition to reduce VAT.

petition.parliament.uk/petitions/6257…

Thanks for reading this. Sorry it's a long one. I've been sitting on it for a while but today I read of four restaurants close and I'm sat in my empty dining room wondering how I'm paying my bills this month!

Hey @threadreaderapp can you please unroll this for me

"unroll"