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Monday, December 6, 2021

We’d love to pay higher wages – if we can charge £10 for a coffee

It feels like being hit when I’m already down. The VAT rise on hospitality that came in at the start of the month – from a special five per cent rate, introduced to keep us going during the lockdown, to 12.5 per cent – has caused customers to question why their bill is suddenly higher. And no doubt made some question how long to leave it until their next visit.Worse, this is just the first step in the return to the 20 per cent rate, due next April. 

Now, don’t get me wrong. Last year’s cut to VAT rates was certainly a helping hand for my industry when we were on our knees. Yet to expect us to start returning to ‘normal’ at this particular point in the still unfolding Covid drama is hopelessly premature.

The assumption seems to be that Covid is all over bar the shouting. That clearly isn’t true – infection rates remain high and winter is upon us. Meanwhile, businesses like mine can’t just get up to speed in double-quick time after being completely closed for more than four months in 2020, operating under a variety of restrictions for the remainder of the year, plus another three months in early 2021, and then the slow release for social-distancing rules after that.

Yes, there was Eat Out To Help Out, and support via furlough for staff costs when we were closed – though because The Fox Inn only opened in December, we didn’t qualify. And, yes, there were Bounce Back loans to get us up and running again. But amazing as the summer rush of customers has been, and grateful as we are for them continuing to come as autumn becomes winter, most of us are still at best in catch-up mode with our bank balance.

It is too late to go back on the step change to 12.5 per cent on VAT, but there is a strong case to argue, as the hospitality industry is doing, for sticking at that rate for at least another year, rather than lifting it again to 20 per cent in the spring. It would give us a chance to reach a more stable place.

Special pleading, when everyone is feeling the pinch of rising petrol prices, sky-rocketing energy costs, and our weekly shops being more expensive? Of course it is, but as an industry we are also facing particular problems. The biggest is staff shortages – The Fish House currently closes after Sunday lunch and doesn’t reopen until Wednesday morning.

The facts are these: our staff take home more than the National Living Wage. So someone working 45 hours a week is roughly earning the equivalent of £25,000 per year, with the chance of training and career development to see that baseline total grow.

Of course, we would like to take the Prime Minister’s advice at the Tory party conference and double rates in pursuit of a high-wage, high-skill economy. But we can only afford to pay £20 an hour to our front-of-house staff if you, the customers, are willing to pay £10 for a cup of coffee. 

And for all the talk of how we need to increase our national productivity, the reality in my small business in Dorset is that every single member of our overstretched team could hardly be more productive than they are now, unless they grew a second pair of hands and feet, or could be in two places at the same time.

Likewise, investing in new technology – something we are told businesses have failed to do – may work for some employers, but I have yet to come across a robot that can fillet a Dover sole tableside. So all we will end up doing is putting up prices and putting ourselves out of business.

To an extent, I am more fortunate than others in my trade. Our customers are loyal and appreciate that supporting our commitment to locally produced, seasonal and sustainable ingredients brings with it additional costs. It also means that we change our menus all the time depending on what finds its way into our kitchen. 

There are plenty of good restaurants where the menu will only change two or three times a year. And so it is hard for them to adjust their prices upwards when the costs of staple ingredients rise as quickly as they are right now.

Can I therefore make a plea for real, sustained engagement from the Government, based on a plan that appreciates the challenges of the hospitality industry? The aspirational slogans we have been hearing of late just don’t sound so attractive down here at the coalface.

As told to Peter Stanford

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