A “perfect storm” of rising payroll costs, changes to business rates and economic uncertainty over Brexit threatens to undermine the growth of an evolving and innovative sector, the ALMR has warned.
With Britain’s exit from the EU expected to be triggered in April 2017, just as changes to business rates and the national minimum wages come into force, ALMR chief executive Kate Nicholls urged the Government to delay or reassess some the policies.
She was speaking as the ALMR – the Association for Licensed Multiple Retailers – launched its 2016 Benchmarking Report alongside Christie & Co.
The report underlined the continued evolution of the licensed hospitality sector with food sales now accounting for 32% of revenue.
But it also revealed that rising operating costs, particularly payroll costs, threatened to undermine growth, as the average costs associated with running a pub hit a seven-year high and payroll costs accounted for almost 30% of turnover.
Nicholls said: “Even if we don’t have a significant downturn, when Article 50 is triggered, we will see some type of dip in consumer confidence as we had with the referendum result. The pound will suffer, shares will suffer. For a lot of consumers there’s still caution about what Brexit means.
“Potentially we could be hitting a perfect storm come April.”
Presenting the survey’s findings, Nicholls showed how after the 2007 recession, there was a two-year time lag before the sector has hit by negative growth in 2009, and suggested this could be the case with the shock of Brexit in 2017.
To mitigate the impacts, Nicholls urged the government to delay the implementation of the apprenticeship levy, due to come into force in Spring 2017, which will require all companies with a payroll bill over £3m to pat towards apprenticeship schemes.
She said the National Living Wage should be reassessed and reverted back to an original target of 60% of medium earnings, rather than a compulsory £9 an hour by 2020 – or risk forcing job cuts on the sector.
And she argued for the reintroduction of high street rate relief, which was taken away last year, on the grounds that hospitality business are labour and property intensive yet pay a disproportionately high amount in rates.