Leeds Hospitality Sector Warns of Closures Without Further Government Aid

Restaurant and bar proprietors across Leeds have indicated that businesses within the hospitality sector may face closure if they do not receive increased government support. They informed the BBC that the preceding “difficult five years” had been challenging, but Labour’s recent Budget had exacerbated their predicament. Owners attributed rising operating costs to an increase in the national living wage and employer National Insurance contributions. Conversely, Chancellor Rachel Reeves stated that the government had prolonged business rates relief for an additional year and committed to reforming the rates system, which is expected to benefit hospitality enterprises. Ian Leigh, managing director of Chaophraya, a Thai restaurant with locations in Leeds, Scotland, Birmingham, and Newcastle, characterized Labour’s Budget as a “direct hit on growth.” Mr. Leigh further commented: “With Brexit, Covid, energy bills and consumer sentiment it is a perfect endless storm. The sector takes pride in being resilient but we are almost expecting the next calamity.” He articulated that the Budget’s reduction of the National Insurance threshold constituted a “tax on the number of people you employ, not a measure based on profits or any other business success” and predicted it would “hurt” his establishment. Mr. Leigh proceeded to elaborate that the Budget was already exerting an adverse effect on his restaurant. “The day after the Budget, we had a key meeting hoping to get some investment signed off to enable us to grow the business, open a couple more sites and employ more people.” He continued, “But the change in National Insurance was enough to spook our investors and they dropped out. They said it was a huge change and we’d have to change our business model.” James Ince, who launched Number 8 Cocktail Bar in Meanwood, Leeds, in November 2021, expressed comparable apprehensions regarding the Budget’s effect on his establishment. He has observed an escalation in his expenditures, with the costs of beer, wine, gas, and utilities increasing, and voiced concerns that businesses might cease operations without additional assistance. Mr. Ince had anticipated that the Chancellor would propose a temporary reduction in VAT for the hospitality and leisure sectors to stimulate growth. He further stated: “It is difficult to invest when all you can see is rising costs and the profits aren’t the healthiest. It’s a difficult position when you try and look to the future to see a pathway and there’s not much to go on.” The rooftop bar Angelica & Crafthouse in Leeds is among those affected, having declared its closure this week, citing “economic challenges.” During a recent visit to the city, Reeves acknowledged that she was “not immune” to the difficulties encountered by small businesses. She stated: “I didn’t want the end of business rates relief to happen, so we have been able to extend the relief for a further year and we want to have permanent lower rates for smaller retail, hospitality and leisure businesses.”